JB posts 2007 profit
 

Kudos to jetBlue on great 2007 numbers!

Some highlights from the first few minutes of the call (all I was able to hear thus far):

• Talks have already begun with LH for possible interlining/code shares
• 3 new cities to be announced in 2008 (probably with more Caribbean focus)
• Slowing growth to 5-8%, down from project 6-9%
• Sell 6 A320s (incl. 2 announced in last call)

What if the LH partnership fosters into something like a regional *A member??

More likely if UA leaves *A as part of a merger. That would leave *A with only US and B6 in the US, which is pretty poor coverage. At the same time, however, I would guess UA and US would both oppose B6 joining the alliance.

Not completely out of the realm of reason, but I wouldn't bet on it until other merger/alliance shifts happen.

While cash on hand is/was tight before LH, it's interesting to see the endless columns devoted to B6's imminent demise when B6 remains the U.S. carrier with the longest period of profitability since 9/11 and the shortest period of losses since 9/11...

Emphasis mine.

Do they have the most profit? Or just the most consecutive quarters? I'd take +100/-5/-5/-5 over +5/+5/+5/+5 any year. I have no idea what the numbers are, but I do know that statistics can be used to support whatever purpose you want them to :)

B6 has $834MM plus $300MM from LH on hand. That's not a ton of money, but they can get by on that with a pretty decent run rate. Of course, I have no idea how the new airplanes coming online and the old ones leaving is going to impact the cash flow, nor do I know what, if any, major debt obligations there may be coming due in the near future.

CASM isn't up too much, but if the domestic market goes at all soft there is going to be trouble; B6 is not diversified enough to withstand a major down-turn in domestic travel.

Why would UA oppose B6? The only place they compete is IAD but that is not the bulk of B6's ops. B6 would be a very nice partner to UA (not merged) if UA placed their code on B6 and then would allow people to connect to *A's ex-JFK transatlatnic ops.

I never wrote the most profit, but, however, it is true that B6's cumulative losses since 9/11 are minuscule compared to all the legacies.

The difference, which is very significant of course, is that they are very cash poor compared to the legacies.

And as far as posting a loss in 4th qtr, B6 is hardly alone in this category.

But the lack of cash is a big problem, of course, which has been bolstered by LH...even then the total cash reserves are still low obliging B6 to keep posting profits, hence the slew of upcoming initiatives to increase revenue (refundable fares, premium section in front of a/c, etc.)

You wrote "the U.S. carrier with the longest period of profitability since 9/11 and the shortest period of losses since 9/11." I'm curious how you define that. And I'm pretty sure there's a group of folks down at DAL that might challenge the notion.

WN and CO posted profits. DL's loss decreased, though that's still not great. UA, US, F9 and AA all posted losses. I stopped looking at this point, but there are some carriers that aren't losing money out there. I'm glad that B6 is profitable for the year, but claiming that they have the longest period of profitability doesn't really work unless you can define that.

With all due respect, stupid strategy. It's just like gambling in a casino. You're up $500, and slowly lose $20 on many rounds/hands to follow. Before you know it, those small losses add up and you're at BEP/negative side. Essentially, consistent profits is much more important than chasing those small losses.

I have heard B6 will accepted deliveries 12x A320 & 6x E190 will be there in 2008. What about others specific information from B6 has defer deliveries until 2010 or 2012? By year-end B6 will have 110x A320 & 36x E190, am I correct? I'm sure if B6 is continuation more demand growth. I know which specific 3 announced new cities is coming in 2008. My guessing B6 will gets more new cities is: MSP, STL, MKE. Just keep hold my breath if B6 will gets more new routes from SEA anytime soon.

I planned on repeating my 100/-5/-5/-5, not losing forever :D

I'm also still waiting to hear what "the U.S. carrier with the longest period of profitability since 9/11 and the shortest period of losses since 9/11," actually means. I still think that SouthWest (the folks down in DAL that I referenced previously) might challenge that notion, though I admit I don't have hard numbers to back it up.

Even adjusting for the difference in size of the carrier, B6 has cumulatively lost less money than any of the legacies since 9/11, including AA, CO, DL, UA, US, NW.

What I meant by "longest period of profitability is that B6 had a profit in 2001, 2002, 2003, and 2004, a period during which all the legacies each lost billions of dollars. And no, B6 has not been more profitable than WN in the period since 9/11.

The big difference is the lack of cash on hand; that's clearly a huge issue because no business can survive without cash.

Still, the situation needs to be put in perspective.

you counted UA twice and left out WN conveniently - if that is the your perspective.

To be fair, if you adjust for the length of existence for the carrier, and the special charges that the legacies took for Bankruptcies, JBLU will be right in the middle of the pack.

What happened is that JBLU narrowly avoided a near-death, as evidenced by the rebound of stock price. And what did it have to do to avoid that near death?

1. Dilution of the current stock base by selling to, surprisingly, a foreign flagship legacy
2. Tighten up the fees for change and re-pricing
3. Raise the ticket price - evidenced by the posts in the forum about lack of deals and the rollout of Y refundables
4. Attempt to build more code-shares
5. Attempt to tier reward structure
6. Cut down freebies and start charging fees

All that sounds familiar? Yes, JBLU is becoming a legacy, or part of. We judge by the action not the words. GONE are the days where you get superior service for below the cost. Unfortunately, those "deals" were built on the subsidy of investors and un-jaded employees. Now JBLU starts behaving like a legacy, or rather business, those people who love the company for the wrong reasons will have to eat crow, if not now, will be soon.

Last but least, the development of relationship between CO and LiveTV is a very interesting one. It is effectively a cash infusion by CO - JBLU has to pledge something down the road. My guess is it is either the ease of price war over Florida market, or a signal for the upcoming merger mania for the industry.

And, in WN's case, extensive fuel price hedges. Yes, we are all going to have to get used to substantially higher prices at the ticket counter just as we have at the gas pump.

You hint at another factor: decreased growth rate goes hand in hand with stagnant stock price, and that means higher cost to attract and retain employees. Also lower employee morale. The fuel cost increase has started an avalanche of problems.