A JetBlue Airways aircraft prepares to depart from New York’s LaGuardia Airport.
Leslie Josephs | CNBC
In the 24 years since JetBlue Airways first flew, the New York-based airline has set new standards for an airline of its size. Now, with the hiring of some experienced executives and cutting costs, it’s trying to get back to basics.
JetBlue was a pioneer in in-seat entertainment, free Wi-Fi, good snacks and a business class cabin with lie-flat seats that was offered for the first time at lower prices than the competition. More recently, people have also ventured across the Atlantic with flights to London, Paris, Amsterdam and Dublin. And until a judge blocked the deal last month, it was planning to buy budget carrier Spirit Airlines for $3.8 billion. (The airlines are appealing this decision.)
While JetBlue has never lacked for big ideas, it has lacked profit, cost control and reliability. These challenges will be front and center for new CEO Joanna Geraghty 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 chief operating officer. In naming its CEO, the company is promoting an insider who understands the complexities of running an airline with idiosyncrasies such as New York’s crowded airspace.
She is the first woman to lead a U.S. passenger airline.
Joanna Geraghty, President and Chief Operating Officer of JetBlue Airways Corp., speaks during a panel discussion at the World Aviation Festival in London, United Kingdom, Thursday, September 5, 2019.
Chris Ratcliffe | Bloomberg | Getty Images
“The biggest strategic challenge we’ve always faced has been to succeed as a small player in an industry dominated by four major airlines,” Geraghty said in a Jan. 30 conference call, referring to American, Delta, United and Southwest, which control about 80% of the domestic market.
Last week, JetBlue announced it had brought back the airline’s former chief commercial officer, Marty St. George, 59, as president. St. George left the airline in 2019 after 13 years and most recently worked at Latam Airlines as chief commercial officer. St. George, who also previously worked at United Airlines and US Airways, is highly regarded by industry observers for his experience and rapport with frontline employees.
“Marty will be a much-needed force for JetBlue to improve 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 if you can’t trust your schedule.”
Tyesha Best, president of Transport Workers Union Local 579, which represents JetBlue’s roughly 6,000 flight attendants, said members are “hopeful” about St. George’s return but that the airline urgently needs improvements in scheduling and staffing, particularly for the company. Great mint cabin.
“Our quality of life is still not where it should be,” Best said.
JetBlue also promoted 57-year-old Warren Christie, previously responsible for security, fleet operations and airports, to replace Geraghty as COO.
Back to basics
Geraghty, whom JetBlue declined to make available for an interview, must convince investors and customers of the company’s turnaround.
JetBlue’s last annual profit was in 2019, before the pandemic. Wall Street analysts don’t expect the company to turn a profit until 2025, while other airlines have already returned to profitability amid the post-COVID travel surge. Shares of JetBlue are down 29% over the past 12 months, while the NYSE Arca Airline Index is up nearly 6% in that period.
According to the Department of Transportation, JetBlue ranked ninth in on-time performance among U.S. airlines from January to November 2023, with less than 67% of its flights arriving on time.
“As we operate in one of the most complex and demanding airspaces, operational reliability is fundamental to all of our priorities. “It helps us deliver a better customer experience while increasing revenue through fewer refunds and disruption vouchers, as well as better costs as we reduce overtime and bonus pay,” Geraghty said on the conference call.
The company plans to detail its $300 million in new revenue initiatives at an investor day in May and said last month that it was on track to cut costs by up to $200 million by year-end .
“We got the appetizer, but the main course isn’t available until investor day,” said Brett Snyder, president of travel assistance company Cranky Concierge and the website Cranky Flier. “They hire the right people. I’m cautiously optimistic for the first time in years.”
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JetBlue has recently announced some cost cuts: offering staff buyouts, deferring some capital expenditures on aircraft, cutting unprofitable routes and reducing frequencies on some routes to favor aircraft that make money, such as premium leisure travel and the like steady business with customers visiting friends and family.
Snyder said JetBlue needs to take a hard look at its network to eliminate what’s not working and make tough decisions, such as creating more headroom in the system to improve operations.
“Customers expect good service, and when they don’t get it, they make that clear,” Geraghty said in a 2019 interview with CNBC. She said the airline at the time was “coming out of that awkward teenage phase and growing up.” .”
Spirit in the air
JetBlue’s most aggressive expansion was its acquisition of low-cost carrier Spirit Airlines. She made a surprise offer to the airline in April 2022, when Spirit had already agreed to a merger with discounter Frontier Airlines.
A JetBlue Airways aircraft 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 for JetBlue to acquire Spirit. JetBlue argued it was necessary to better compete against rivals when planes and space for growth in the U.S. were limited
The Justice Department sued to block the deal in March 2023, saying it would restrict competition, and in January a federal judge sided with the DOJ.
JetBlue and Spirit said they would appeal the ruling, although analysts are skeptical of a reversal. Investors have so far expressed relief that JetBlue would not pay $3.8 billion for Spirit, which had a market capitalization of $726 million as of Friday’s close.
Last week, Spirit executives sought to allay fears about the airline’s future without a JetBlue takeover, even as Spirit finds itself in dire financial straits, due in part to an engine recall by Pratt & Whitney that has affected dozens of its planes floor leaves.
Geraghty said last month that JetBlue disagreed with the judge’s decision to block the merger, adding: “We need to be prepared with our organic plan if the airlines don’t win their appeal.”
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