A JetBlue Airways plane prepares to depart Recent York’s LaGuardia Airport.
Leslie Josephs/CNBC
Within the 24 years since JetBlue Airways‘ first flight, the Recent York-based airline has pushed the envelope for a carrier of its size. Now, with some veteran executive hires and cost-cutting, it’s attempting to get back to basics.
JetBlue was a pioneer in seat-back entertainment, free Wi-Fi, good snacks and a business-class cabin with lie-flat seats that debuted at lower prices than rivals’. More recently, it’s ventured across the Atlantic with flights to London, Paris, Amsterdam and Dublin. And, until a judge blocked the deal last month, it planned to purchase budget airline Spirit Airlines for $3.8 billion. (The carriers are appealing that call.)
While JetBlue has never lacked big ideas, it has come up short on profits, cost control and reliability. Those challenges will likely be top of mind for incoming CEO Joanna Geraghty when she takes the helm on Monday, replacing Robin Hayes.
Geraghty, 51, has been at JetBlue for nearly twenty years, most recently as president and chief operating officer. By naming her CEO, the corporate is promoting an insider who knows the complexities of running an airline with quirks like Recent York’s congested airspace.
“The important thing strategic challenge we have all the time faced is learn how to thrive as a small player in an industry dominated by 4 large airlines,” Geraghty said on a Jan. 30 earnings call, referring to American, Delta, United and Southwest, which control about 80% of the domestic market.
Last week, JetBlue said it has hired back the airline’s former chief industrial officer, Marty St. George, 59, as president. St. George left the carrier in 2019 after 13 years and most recently worked at Latam Airlines as chief industrial officer. St. George, who also had previous posts at United Airlines and US Airways, is well-regarded by industry watchers for his experience and good relationship with frontline staff.
“Marty will likely be a much needed force of fine for JetBlue for improving the airline’s operational focus and reliability,” said Henry Harteveldt, a former airline executive who runs the consulting firm Atmosphere Research Group. “Legroom doesn’t matter, snacks don’t matter in case your schedule cannot be trusted.”
JetBlue also promoted Warren Christie, who previously was the top of safety, security, fleet operations, and airports, to take over Geraghty’s role as COO.
Back to basics
Geraghty, whom JetBlue declined to make available for an interview, can have to persuade investors and customers concerning the company’s turnaround.
JetBlue’s last annual profit was in 2019, before the pandemic. Wall Street analysts aren’t forecasting it should turn a profit until 2025, while other carriers have already returned to profitability within the post-Covid travel surge. JetBlue’s shares are down 29% during the last 12 months, while the NYSE Arca Airline index is up nearly 6% over that period.
JetBlue ranked ninth in punctuality for U.S. airlines from January through November 2023, with lower than 67% of its flights arriving on time, in accordance with the Department of Transportation.
“As we operate in one of the crucial complex and difficult airspaces, operational reliability is foundational to all of our priorities, helping us deliver a greater customer experience while also improving revenues with fewer refunds and disruption vouchers and higher costs as we mitigate additional time and premium pay,” Geraghty said on the earnings call.
The corporate plans to stipulate the $300 million in recent revenue initiatives in additional detail during an investor day in May, and said last month that it’s on the right track to chop as much as $200 million in costs by the top of the 12 months.
“We have been given the appetizer however the important course is not until investor day,” said Brett Snyder, president of Cranky Concierge travel-assistance company and the Cranky Flier site. “They’re hiring the proper people. I’m cautiously optimistic for the primary time in years.”
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JetBlue has recently announced some cost cuts: offering staff buyouts, deferring some capital expenditures on aircraft, trimming unprofitable routes, and reducing frequencies on some routes to prioritize planes for money-makers like premium leisure travel and the regular business from customers visiting friends and relatives.
Snyder said that JetBlue might want to take an extended, hard have a look at its network to chop what is not working, and to make hard decisions, like putting more slack within the system to enhance the operation.
“Customers expect good service, and once they do not get it, they’re vocal about it,” Geraghty said in an interview with CNBC in 2019. She said the airline on the time was “exiting that awkward teenage stage and becoming adults.”
Spirit up within the air
JetBlue’s most aggressive expansion was its pursuit of budget carrier Spirit Airlines. It made a surprise offer for the carrier in April 2022 when Spirit had already agreed to merge with fellow discounter Frontier Airlines.
Spirit shareholders eventually rejected the cash-and-stock take care of Frontier and voted in favor of JetBlue’s acquisition of Spirit, a deal JetBlue argued it needed to raised compete against rivals when aircraft and space is proscribed for growth within the U.S.
The Justice Department sued to dam the deal in March 2023, arguing it would scale back competition, and in January a federal judge sided with the DOJ.
JetBlue and Spirit said they’re appealing the ruling, though analysts are skeptical a few reversal. Investors have appeared relieved to this point that JetBlue would not be paying $3.8 billion for Spirit, which had a market capitalization of $726 million as of Friday’s close.
Spirit executives last week sought to calm fears concerning the airline’s future potentially and not using a JetBlue takeover, whilst Spirit navigates rocky financial footing, partially as a result of a Pratt & Whitney engine recall that’s grounding dozens of its planes.
Geraghty last month said JetBlue disagrees with the judge’s ruling to dam the merger and added if the airlines don’t win their appeal, “We should be prepared with our organic plan.”