No Longer an Upstart, JetBlue is Facing Turbulence

For the first time since it began flying in 2000, the Forest Hills-based airline - known for its low fares and such extras as leather seats and individual TV sets - lost money, $42 million in the last quarter of 2005.


JetBlue, now the largest carrier at Kennedy Airport, has announced plans to expand to at least 10 additional cities this year, including Richmond, Va.; Austin, Texas; Portland, Maine; and Hamilton in Bermuda, using some of the 10 new E-190s it has received from manufacturer Embraer of Brazil. JetBlue has about 7,984 full-time employees.

Enhancing bread-and-butter

The airline continues to build on its reputation for amenities and facilities. It is spending nearly $800 million to construct a 635,000-square-foot terminal at Kennedy, attached to the historic TWA building, to be completed in 2009. It has introduced XM Satellite Radio in its airplanes, and in January, began serving Dunkin' Donuts coffee aboard all flights. And fares haven't skyrocketed: The New York to Fort Lauderdale fare that was $91 one-way in 2000 is $100 today, the airline says.

JetBlue has firm orders for 100 E-190s and options to buy another 101. The E-190s seat 100 passengers, have a range of about 2,000 miles and will allow JetBlue to serve smaller markets in the Midwest and South, where airport runways tend to be shorter. JetBlue's 88 Airbus planes seat about 156 and are able to fly transcontinental flights.

The most recent U.S. Department of Transportation statistics show that in January, JetBlue's flights arrived late 29.4 percent of the time, the third consecutive month that JetBlue finished with the worst on-time arrival rate in the industry.

"We're not pleased by that at all," Dervin said. "That is one of the main areas we need to improve. This is totally unacceptable."

Dervin blamed bad weather, including the Feb. 11 blizzard, for some of the on-time problems. Additionally, she said, many of JetBlue's flights are in the heavily traveled East Coast corridor, where delays for all airlines are hardly unusual. Until three months ago, JetBlue had been in the top one-third of airlines in terms of on-time performance.

Inevitable comparisons to flash-in-the-pan airlines crop up in interviews. The skyways of the past are littered with the ruins of airlines that once held great promise, such as People Express, which offered fares discounted up to 60 percent below competitors. It folded in 1987, six years after it turned the commercial aviation industry on its head.

People Express' demise is blamed on vast over-expansion.

But analysts say JetBlue is no People Express. For one thing, they say, JetBlue is far better capitalized than People Express ever was - JetBlue's market cap is $1.97 billion, and People Express' market cap, close to its height in 1983, was $382.3 million.

And, they add, JetBlue's top executives have far more airline industry experience than did the brass at People Express. Neeleman, 46, has been in the industry for more than two decades, starting in an executive spot with Southwest Airlines, a pioneer in the low-cost carrier world.

Still, JetBlue needs to find routes that are profitable and not already cluttered with competitors, said industry expert Mike Boyd, president of The Boyd Group, airline consultants based in Colorado. And, whether it is ready or not, analysts say, JetBlue is in a different world now.



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