A JetBlue Airways plane prepares to depart from New York’s LaGuardia Airport.
Leslie Josephs | CNBC
In the 24 years since then JetBlue AirwaysOn the first flight, the New York-based airline pushed the envelope for a carrier of its size. Now, with some hiring of veteran executives and cost-cutting, it’s trying to get back to basics.
JetBlue pioneered in-seat entertainment, free Wi-Fi, good snacks and a business-class cabin with lie-flat seats that debuted at lower prices than competitors. More recently, it has been crossing the Atlantic with flights to London, Paris, Amsterdam and Dublin. And, until a judge blocked the deal last month, it planned to buy a budget airline Spirit Airlines for $3.8 billion. (The carriers are appealing the decision.)
While JetBlue never lacked for big ideas, it lacked profit, cost control and reliability. These challenges will be at the forefront of incoming chief executive Joanna Geraghty’s mind when she takes the helm on Monday, succeeding Robin Hayes.
Geraghty, 51, has been with JetBlue for nearly two decades, most recently as president and CEO. In naming its CEO, the company is promoting a person who knows the complexities of running an airline with quirks like New York’s congested airspace.
She is the first woman to lead a US passenger airline.
Joanna Geraghty, president and CEO of JetBlue Airways Corp., speaks during a panel session at the World Aviation Festival in London, United Kingdom, Thursday, Sept. 5, 2019.
Chris Ratcliff | Bloomberg | Getty Images
“The key strategic challenge we’ve always faced is how to thrive as a small player in an industry dominated by the big four airlines,” Geraghty said on a Jan. 30 earnings call, referring to American, Delta, United and Southwestwhich control about 80% of the domestic market.
Last week, JetBlue said it had rehired the airline’s former chief commercial 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 Commercial Officer. St. George, who also held previous positions at United Airlines and US Airways, is highly regarded by industry observers for his experience and rapport with front-line workers.
“Marty will be a much-needed force for good for JetBlue to improve the airline’s operational focus and credibility,” said Henry Harteveldt, a former airline executive who runs the consulting firm Atmosphere Research Group. “Legroom doesn’t matter, snacks don’t matter if you can’t trust your schedule.”
Tyesha Best, president of the Transport Workers Union Local 579, which represents JetBlue’s roughly 6,000 flight attendants, said members were “hopeful” about the return of the St. Mint class cabin.
“Our quality of life is still not where it needs to be,” Best said.
JetBlue also promoted Warren Christie, 57, who previously headed safety, security, fleet operations and airports, to take over Geraghty’s role as COO.
Back to basics
Geraghty, who JetBlue declined to make available for an interview, will have to convince investors and customers about the company’s turnaround.
JetBlue’s last annual profit was in 2019, before the pandemic. Wall Street analysts don’t expect it to turn a profit until 2025, while other carriers have already returned to profitability amid a post-Covid travel surge. JetBlue shares are down 29% over the past 12 months, while the NYSE Arca Airline the index increased by almost 6% during this period.
JetBlue ranked ninth in punctuality among U.S. airlines from January to November 2023, with less than 67 percent of its flights arriving on time, according to the Department of Transportation.
“As we operate in one of the most complex and demanding airspaces, operational reliability is fundamental to all our priorities, helping us deliver a better customer experience while improving revenue with fewer refunds and disruption coupons and better costs as we reduce overtime and premiums pay,” Geraghty said on the earnings call.
The company plans to describe its $300 million in new revenue initiatives in more detail during an investor day in May and said last month it was on track to cut as much as $200 million in costs by the end of the year .
“They’ve given us the appetizer, but the main course isn’t until investor day,” said Brett Snyder, president of travel assistance company Cranky Concierge and website Cranky Flier. “They’re hiring the right people. I’m cautiously optimistic for the first time in years.”
Aviation shares
JetBlue recently announced a number of cost-cutting measures: offering staff buyouts, deferring some capital expenditures for aircraft, cutting unprofitable routes and reducing frequencies on some routes to prioritize planes for economy, such as premium leisure travel and steady business from customers who they visit friends and relatives.
Snyder said JetBlue will need to take a very hard look at its network to cut what isn’t working and make tough decisions, such as putting more slack in the system to improve operations.
“Customers expect good service, and when they don’t get it, they’re vocal about it,” Geraghty said in an interview with CNBC in 2019. She said the airline at the time was “coming out of that awkward teenage stage and becoming adults.”
Spirit in the air
JetBlue’s most aggressive expansion has been its pursuit of budget carrier Spirit Airlines. It made a surprise bid for the carrier in April 2022, when Spirit had already agreed to merge with the other discount carrier Frontier Airlines.
A JetBlue Airways plane sits on the tarmac at Fort Lauderdale-Hollywood International Airport on January 31, 2024 in Fort Lauderdale, Florida.
Joe Raedle | Getty Images
Spirit shareholders ultimately rejected the cash-and-stock deal with Frontier and voted in favor of JetBlue’s acquisition of Spirit, a deal JetBlue argued needed to better compete with rivals when aircraft and space are limited for growth in the USA.
The Justice Department sued to block the deal in March 2023, arguing it would reduce competition, and in January a federal judge sided with the DOJ.
JetBlue and Spirit said they are appealing the ruling, though analysts are skeptical about the reversal. Investors appeared relieved so far that JetBlue would not pay $3.8 billion for Spirit, which had a market capitalization of $726 million as of Friday’s close.
Spirit executives last week sought to allay fears about the airline’s future, potentially without a JetBlue takeover, even as Spirit has struggled financially, in part because of a Pratt & Whitney engine recall that is grounding dozens of its planes .
Geraghty last month said JetBlue disagreed with the judge’s decision to block the merger and added that if the airlines do not win their appeal, “We have to be prepared with our organic plan.”
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