JetBlue pushes out Neeleman as CEO

[MiAAmi]

NEW YORK, May 10 (Reuters) - JetBlue Airways Corp. (JBLU.O: Quote, Profile , Research) on Thursday pushed out founder David Neeleman as chief executive three months after a service meltdown.

JetBlue said he would carry on as non-executive chairman playing a more strategic role.

The budget carrier replaced Neeleman, 47, with president and chief operating officer Dave Barger, 49, effective immediately.

The sudden change in leadership comes after JetBlue suffered an embarrassing service disruption on Feb. 14 that exposed weaknesses in the seven-year-old airline's operations.

A Valentine's Day ice storm stranded passengers on planes for hours, led to nearly 1,200 flight cancellations over several days, and cost the company more than $30 million.

"The board suggested to David that he could best serve the company in a more strategic role. David agreed," JetBlue spokeswoman Jenny Dervin said. "The conversation was initiated by the board."

 

[WNrforlife]

NEW YORK, May 10 (Reuters) - JetBlue Airways Corp. (JBLU.O: Quote, Profile , Research) on Thursday pushed out founder David Neeleman as chief executive three months after a service meltdown.

JetBlue said he would carry on as non-executive chairman playing a more strategic role.

The budget carrier replaced Neeleman, 47, with president and chief operating officer Dave Barger, 49, effective immediately.

The sudden change in leadership comes after JetBlue suffered an embarrassing service disruption on Feb. 14 that exposed weaknesses in the seven-year-old airline's operations.

A Valentine's Day ice storm stranded passengers on planes for hours, led to nearly 1,200 flight cancellations over several days, and cost the company more than $30 million.

"The board suggested to David that he could best serve the company in a more strategic role. David agreed," JetBlue spokeswoman Jenny Dervin said. "The conversation was initiated by the board."

Like they say, if you can't stand the heat, get out of the kitchen.....

 

[FWAAA]

Not unexpected at all. Neeleman has presided over one bad decision after another. Let's review some of them:

1. Second fleet type. Never a good idea to intentionally increase costs in hopes of chasing smaller and smaller markets. If you're good at what you do, you can grow a small airline into a big airline with a single fleet type. Just like WN has done.

2. Far too aggressive growth rates. Early success caused the not-so-astute businessman (Neeleman) to think he could turn B6 into WN in less than half the time it took WN to grow large. Big mistake. Too much growth, much too quickly, and losses are generally soon to follow. That's what happened at jetBlue. Loss after loss after loss, even when the dinosaur legacies are turning from their post-September 11 losses into profits.

3. Failure to hedge fuel. Although B6 currently has an effective hedging program, it suffered in the 2004-06 fuel run-up because the leadership failed to emulate WN's effective fuel hedging strategies. The dinosaur legacies, of course, also failed to hedge fuel in the same period, but they were prevented from doing so because of their negative cash flow and poor credit ratings. Not so at B6. When you're nearly bankrupt, you have to pick and choose among the things on which you spend money. B6, on the other hand, was well-capitalized and had positive cash flow soon after it began flying. Yet B6 found itself exposed to fuel price spikes, just like the legacies that couldn't effectively hedge. Neeleman just couldn't stay focused on what mattered. Better to chase smaller and smaller markets with a second fleet type than hedge fuel. What an idiot. And you can see what these stupid decisions did to the stock price.

Had Neeleman slowed aircraft deliveries following September 11 (as WN did) and focused on the inevitable rise in fuel prices, we wouldn't be posting to a thread like this. Instead, he finally lost Soros enough money (and everyone else) to cause a change at the top.

Sure, B6 is a fun, hip airline for customers. It's too bad (for the investors) that it's been so poorly managed for the last seven years.

 

[delta777]

Neeleman, like every other CEO of a new airline, also had a huge cost advantage, at least initially. An all new workforce, which is being paid at the start of the payscale. No pension obligations to speak of at this point. New aircraft, aka very low maintenance, no heavy maintenance checks for the first few years. Which in turn enables B6 to offer ridiculously low prices.

Not that i'm blaming Neeleman for any of those things. Heck, if other airlines could do it, they would as well. It's just that it is a hell of a lot easier to run a startup, with its artificially low costs, then it is 5-10 years into the game. B6 is starting to face the very same issues all the other established carriers already face, which include a more senior workforce, which means more $$$, aircraft cycling thru heavy maintenance checks, all the while trying to maintain the very low prices that the public has come to expect.

 

[avion]

another upstart with problems.. hmm never heard of such a thing.. jfk as a hub.. even the newbies thought.. HUH.. jetblue has aircraft and very expensive slots.. now i understand why southwest has not beefed up their dulles service for the last 12 months.. waiting for the kill. my oponion. still cant believe a weekend in february can cause such a problem for jetblue.. we at usairways deal with PHILADELPHIA everyday which is a meltdown everyday.. we are still trying to find lost baggage from 2005.

 

[whatkindoffreshhell]

Question: How can you identify a pioneer?

Answer: Look for the guy with the arrows in his back.

I'd still put my money on Neeleman than any of the other knuckle-headed posters thus far in this thread.

He has repeatedly created value in the airline industry.

So he was 'kicked upstairs' by the board.

Too bad the UA board doesn't have a pair of brass ones to administer the same spanking to Tilton/Brace.

Imagine!

 

[Nor'Easta]

Neeleman Out!

 

[AstroLounge]

For the JetBlue people......did YOU honestly see this coming or did it come as a total surprise? Blaming DN for the events in February is rather ludicrous (although there have been some CEO's that believe they are that powerful . Looking from the outside (an industry insider and consumer) I would be more inclined to believe DN when he apologizes for service disruptions/meltdowns than any of the other airline exec......HE always struck me as a sincere, driven individual with compassion and integrity.