JetBlue Board Pushes Out Founder Neeleman

NEW YORK -- JetBlue Airways Corp. replaced founder David Neeleman as CEO less than three months after operating snafus essentially shut down the carrier for days and frayed relations with customers.

The airline on Thursday appointed President Dave Barger as its new chief executive, effective immediately. Neeleman had been chief executive since 1998 and will retain his role as chairman.

Neeleman said the change came at the request of the company's board, which wanted to separate the CEO and chairman jobs.

"It's just really good governance, to separate the chairman and the CEO role," Neeleman said.

The move comes after storms on Valentine's Day and St. Patrick's Day essentially shut JetBlue down, forcing the cancellation of nearly 1,700 flights and stranding thousands of travelers throughout the Northeast.

To prevent a recurrence, JetBlue drafted a "customer bill of rights," under which the company now issues vouchers to some customers who experience delays.

The canceled flights and vouchers cost JetBlue $41 million, contributing to the company's first quarter loss of $22 million, or 12 cents a share. That was an improvement over the year-ago quarter, but was less than analysts had originally expected.

Last month, JetBlue lowered expectations for the rest of the year.

Despite the timing, Neeleman said the change at the top isn't a direct result of JetBlue's problems in February and March. He characterized it as "a natural evolution" of JetBlue's leadership structure.

"I think the board has been talking about this for a long time," Neeleman said.

Ray Neidl, an analyst at Calyon Securities, said the change isn't surprising. JetBlue has been consistently "rotating" new managers into the company in recent quarters, he said.

But one can't ignore the impact of JetBlue's fumbled response to the storms earlier this year, he said.

"That was probably the final straw" for Neeleman, Neidl said.

Neeleman conceded that JetBlue's hiring of Russell Chew as chief operating officer in the aftermath of the storms may have accelerated the timing of the CEO change. Chew's presence allowed Barger to focus less on day-to-day operations and more on managing the entire company, which in turn freed Neeleman to return to his roots as a corporate strategist.

"An entrepreneur comes in and he founds the company and then it gets going," Neeleman said of himself. But then, he said an entrepreneur finds himself operating a growing, complicated business - which is not his strong suit. JetBlue operates more than 575 flights daily to 52 destinations.

"It's always tough to kind of let it go," Neeleman said.

Barger, 49, will retain his role as president. He joined JetBlue as president and chief operating officer shortly after Neeleman founded the airline in 1998.

"It really is very natural," Barger said of the change. "It's part of the life cycle of the company."

Neeleman said the subject of any change in his compensation did not come up with the board. Neeleman made $257,672 last year in salary and other compensation, according to Securities and Exchange Commission filings. Barger made $521,998.

Neeleman, who owns about 10.8 million JetBlue shares, or 6 percent of those outstanding, said he's not worried about whether he will continue to draw his salary, which he says he regularly donates to a catastrophic fund for JetBlue crewmembers. Of Barger, Neeleman said: "He probably needs to get a raise."

Shares of JetBlue rose 49 cents, or 4.7 percent, to $10.89 in midday trading. The stock is off 36 percent since mid-January, when it hit an intraday high of $17.02.

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