JetBlue reviewing expansion; New leaders aim for a turnaround, will evaluate fleet size and market, drop growth forecast to 10-13%

The new day-to-day leadership at JetBlue Airways Corp. is beginning to make itself felt, revealing to analysts that the low-cost carrier intends to take a new and a hard look at its expansion plans over the next two months in an effort to make a turnaround.

At a Merrill Lynch conference in Manhattan on Wednesday, JetBlue's new chief executive, David Barger, told analysts that the Forest Hills-based carrier will evaluate the need for the airplanes it has already ordered and the 16 new markets it added last year. The company is aiming to create the best match it can between expansion and profitability, he said.

Barger told analysts that JetBlue now plans growth of 10 percent to 13 percent this year, a decline from 20 percent growth forecast earlier this year. JetBlue also may shed more airplanes. The airline is slated to take delivery of 44 planes in 2007. But that number may no longer fit the airline's evolving model, analysts said.

"I think it's premature to say any meaningful changes are in store," Barger told analysts at a transportation conference. "But let me caveat and say that everything is on the table."

Bryan Baldwin, a JetBlue spokesman, said yesterday it has not been determined whether the airline will issue a public report of any kind after the 60-day review.

Barger, who had been JetBlue's president, was named chief executive May 10, replacing David Neeleman, the airline's founder, who was eased out of the chief executive's job and made non-executive chairman. The management shuffle followed financial losses and embarrassing service disruptions at Kennedy Airport during a February snow and ice storm.

JetBlue posted a $22 million loss in the first quarter. The airline is expected next week to disclose preliminary information about its second quarter financial results.

JetBlue's new leadership also includes Russell Chew, who in March was named the airline's chief operating officer. Chew had been COO for the Federal Aviation Administration, a post he held for four years. He had held a variety of executive positions with American Airlines, the world's largest carrier.

Barger and Chew are seen as "operations executives," as opposed to Neeleman, who is considered an airline "visionary" but perhaps not the person to run JetBlue on a daily basis.

Robert W. Mann, an independent analyst and airline consultant in Port Washington, said one difference in style has already emerged from the old to the new management.

In stepping forward and disclosing JetBlue's plans to analysts, Barger was being "more publicly introspective" than Neeleman had been, Mann said. Mann also said he was certain similar reviews had been conducted in all the years Neeleman was chief executive, but those reviews may have been kept closer to the vest.

Mann said JetBlue may sell some of its fleet of older Airbus A-320 airplanes as it takes on newer Embraer 190 jets.

Like all other airlines, JetBlue has been grappling with higher fuel costs. But JetBlue also is facing increased competition from legacy carriers who have shaped up their balance sheets and otherwise trimmed costs. Delta Air Lines, for example, a major JetBlue competitor on the heavily traveled East Coast routes, has recently emerged from Chapter 11 bankruptcy protection and is adding flights at Kennedy, JetBlue's home base.

JetBlue is not alone among discount carriers to face multiple challenges. Dallas-based Southwest Airlines, the nation's leading low-cost airline, has no trouble filling up its airplanes, but it must discount fares because of the competition, chief executive Gary Kelly told analysts.

Shares of JetBlue have been sluggish this year. They closed up 27 cents, to $10.60 yesterday. JetBlue's stock is down more than 20 percent on a year-to-date basis.

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