Long Beach = Waterloo

[enilria]

1) JetBlue BUYS airplanes so the low maintanance costs are more than made up for by the cost to acquire the airplanes. But this is also made up for by the high start-up costs of starting service in so many different airports...

2) You speak of "airlines irrational need to increase market share at the expense of profits." So you think the airlines are totally rational by decreasing marketshare in the hopes of decreaseing losses. BTW, JetBlue is profitable.

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I wholeheartedly disagree with your responses.

1) Buying = leasing ; it's the same thing. If one was clearly better than the other then no one would lease. The only difference between buying and leasing is that leasing lets you hide an obligation so it doesn't appear on you balance sheet. Either choice has the same effect on cash flow and profts.

2) Reducing supply to meet demand is not stupid, in fact, it's a fundamental tenant of a stable economic system. Reducing price below cost to stimulate demand while not reducing capacity is suicidal. Jet Blue is doing just that in Long Beach (in fact increasing demand in intra-California where there is excess capacity already). $19 is not covering costs. It probably doesn't even cover fuel. BTW, Jet Blue said they would probably lose money in 3Q.

 

[Rhino]

SWA began flying out of BWI with $19 introductory fares.

The publicity JB got for initiating a CA fare-war is probably worth it.

LB could be a good deal for JB. Won't go truly head-to-head with SWA, nor will AA be able to put in wrap-around flights.

AA has forced JB to deviate form a more optimum growth path by forcing them to put all its new aircraft into LB to utilize their slots. Once that's done, I expect JB to return to their game plan.

 

[mga707]

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On 8/26/2002 1:24:27 PM

But lets not kid ourselves, how many start-ups have made it to 10 years? 3: WN, YX, HP.

You can add two more: ATA and Spirit have both been operating scheduled service for more than a decade now.

And (IMO), if you include a pre-dereg intra-state carrier like WN, you should also include PSA, AirCal, and Air Florida--all were pre-dereg intra-state carriers that lasted at least ten years. Only 12 in the case of the latter, but still more than 10!
[:bigsmile:]

 

[Speedbird]

Quote from enilria:

"BTW, Jet Blue said they would probably lose money in 3Q."

Do you have a reference for this statement, or are you confusing a report you might have read on one of the big 5 majors. [:bigsmile:]

 

[enilria]

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On 8/27/2002 1104 AM

Quote from enilria:

"BTW, Jet Blue said they would probably lose money in 3Q."

Do you have a reference for this statement, or are you confusing a report you might have read on one of the big 5 majors. [:bigsmile:]
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In an analyst meeting about three weeks ago, Neeleman said something close to this: "the industry capacity picture for third quarter will make it very difficult for us to achieve a profit. We are seeing a lot of weakness in September."

 

[enilria]

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On 8/26/2002 1139 PM

SWA began flying out of BWI with $19 introductory fares.

AA has forced JB to deviate form a more optimum growth path by forcing them to put all its new aircraft into LB to utilize their slots. Once that's done, I expect JB to return to their game plan.
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I think on the first point, BWI was nothing like LGB. SWA/WN was competing with US and the $19 fares pointed out the fact that it was now going to be a lot cheaper to fly than before when US controlled Washington/BWI. In LGB, JB will be no cheaper than WN after it is all said and done which means it is essentially an unsustainable ploy and customers will soon realize WN is the better option with equally low fares and more flights.

I agree with your second point, but what that means is that AA was successful in wasting JB's resources and got them to diverge from their plan. That is quite a tactical victory on AA's part.

 

[Diesel8]

Mr. Neelman did say that jetBlue will probably not post a profit in September,have not heard anything about the outcome off all of the third quarter, but would not be surprised if jetBlue turned a profit.