Etops1 From Puerto Rico, joined Nov 2005, 865 posts, RR: 1 Posted (7 years 2 months 1 week ago) and read 7649 times:
this is a letter doug parker sent out to employees today regarding jetblues announcement on coming into clt. what a true leader. much better than our old ceo dave seigels response "there coming to kill us" referring to wn's entrance into phl.
To: US Employees (especially to our Charlotte-based team):
In announcing JetBlue's intention to add a handful of regional jet flights from JFK to Charlotte and Raleigh-Durham yesterday, JetBlue CEO David Neeleman made the following comment "Charlotte and Raleigh-Durham have natural ties to New York, but until now, the people of North Carolina have overpaid for sub-standard service." As US Airways is the largest provider of service from Charlotte to New York, we can assume that at least some of Mr. Neeleman's remarks were targeted at us. A number of you were upset by these remarks so I thought I should share my views with you.
First, I know David pretty well and I can assure you he is a genuinely good person. That he chose to make such a remark is probably indicative of the stress that JetBlue is under and we should not take his remarks personally. JetBlue is experiencing a relative profitability decline that is unprecedented in our industry. It is probably very hard for them to hear that US Airways (who they'd counted on being gone by now) is expecting to be profitable in 2006 (excluding transition related expenses), while they have disclosed that they expect to be unprofitable.
Their problems are serious and structural: 1) they have a low cost structure that is driven primarily by a low average age (low seniority employees, low maintenance on new airplanes for three years, etc.); 2) to maintain a low average age, they must grow; and 3) there are no more growth markets in our industry (which is where our survival really hurt them). And, their problems are well appreciated by the financial markets. Since our merger, US Airways stock has appreciated over 100%, while JetBlue is down about 20%. It doesn't appear that our customers are overpaying; rather it appears that passengers aren't willing to pay JetBlue enough for them to be profitable.
Some of this is likely due to their own service. While US Airways has been the leading on-time major airline since our merger, JetBlue has been among the worst! To characterize arriving late in JFK with a TV in front of you as better service than being on-time in LGA with a first class cabin, an award-winning frequent flyer program, business clubs and a global alliance, suggests that JetBlue may be looking at the wrong service standards.
The fact of the matter is JetBlue is struggling mightily and the hard working employees of US Airways are a big reason why. Rather than get upset by their comments we should keep them in context.
US Airways is going to be here long after JetBlue -- that was not their plan and they are trying to figure out what to do about it.
We, on the other hand, know what to do -- we will compete aggressively, we will focus on running our own race and we will win. Thanks so much for taking care of our customers and please keep it up.
Sincerely,
Lightsaber From United States of America, joined Jan 2005, 10886 posts, RR: 100 Reply 4, posted (7 years 2 months 1 week ago) and read 7529 times:
I find this letter very interesting.
But it doesn't address one thing: Service from RDU and CHL is perceived as overpriced. I have no doubt that US will cut prices to match B6 and even grow service. I also have no doubt that this won't be easy at first for Jetblue.
Quoting Etops1 (Thread starter): but until now, the people of North Carolina have overpaid for sub-standard service."
Conveniently doesn't note US's baggage statistics. Oh, I know B6 has an on-time issue. But they have great customer satisfaction.
I agree US's survival hurt the rest of the industry. Ok... and that has to do with??? But to say no more growth markets? I disagree. There are fewer remaining. That is where the E190 comes in.
Quoting Etops1 (Thread starter): Thanks so much for taking care of our customers and please keep it up.
A none to subtle hint that US had better get up its customer satisfaction rating.
Quote: Among the study's conclusions: Southwest Airlines had the lowest rate of complaints, 0.18 per 100,000 passengers; US Airways had the highest, 1.86.
US is in for a fight. And yes B6 will lose money this year.
Quoting Etops1 (Thread starter): It is probably very hard for them to hear that US Airways (who they'd counted on being gone by now) is expecting to be profitable in 2006 (excluding transition related expenses)
Sorry, but there are so many write offs after emerging from BK that US should be profitable even with "transition related expenses." I hope HP/US solves their union culture clash soon... personally, I think that's HP/US's weakest link.
Dutchjet From Netherlands, joined Oct 2000, 7864 posts, RR: 58 Reply 5, posted (7 years 2 months 1 week ago) and read 7512 times:
How rationale and well written is that!
While I do not agree with everything set forth in the letter, its a rather interesting summary of the situations at JetBlue and US. While both airlines do have challenges ahead - it does appear that the honeymoon at JetBlue is over with.
Question one - Where exactly will JetBlue fly all of those E190s and A320s that they have on order? Dumping even more capacity in the NYC-Florida and NYC-West Coast markets cannot continue to be the answer. Wasnt JetBlue planning to add more focus cities throughout the US?
Question two - How will JetBlue keep its costs at low levels? Operating stations with only two or three flights per day is no answer - anyone at Southwest can tell you that - a station needs atleast 12 to 15 flights per day for productivity purposes. And, were the 190s a good idea? JetBlue violated the primary rule of LCCs - fly only one type of airplane.
Question three - How does JetBlue increase it fares without loosing market share and without reducing pax numbers? NewYorkers now expect $69 flights to Florida and $99 flights to the west coast - JetBlue has spoiled them - can JetBlue effectively raise fares to cover its costs?
Interesting times - how quickly things change. And, the media is partly to blame.....until weeks ago, JetBlue was the media darling of the US airline industry, and now all of the stories are about reduced bond ratings, overcapacity and losses. I really hope that JetBlue can pull this off and does not follow in the footsteps of that other NYC based LCC - better known as People Express.
SNATH From United States of America, joined Mar 2004, 3234 posts, RR: 24 Reply 6, posted (7 years 2 months 6 days 23 hours ago) and read 7493 times:
Whether you agree with him or not, you just have to respect him for writing such a professional and reasonable letter, instead of simply bad mouthing the competition to sound "cool". My hat's off to you, Mr Parker.
Tony
Nikon: we don't want more pixels, we want better pixels.
PSA727 From United States of America, joined Feb 2006, 972 posts, RR: 0 Reply 7, posted (7 years 2 months 6 days 23 hours ago) and read 7456 times:
jetBlue should learn from the lessons of flyI.
Yeah, the love and adoration of your customers is great, but if
they're only flying on your airline because the fares are priced lower
than what is economically profitable, then dark clouds loom ahead.
PlaneHunter From Germany, joined Mar 2006, 6211 posts, RR: 79 Reply 8, posted (7 years 2 months 6 days 23 hours ago) and read 7407 times:
Considering B6 only starts service to CLT and RDU from JFK and doesn't base 50 aircraft at these respective airports, the reaction is quite exaggerated. And there's some truth in what Neeleman said about pricing, if they like it or not.
Quoting B777-700 (Reply 1): Nice...it's about time someone had the testicular fortitude to go after them.
That sounds as if B6 were a threat to the whole industry. B6 introduced some attractive innovations to the US domestic market, brought down fares on numerous overpriced routes and caused competiors to update their products. Not bad if you ask me. Those who complain are free to compete, it's a free market.
Quoting Radelow (Reply 2): Never flown them or Jetblue...
LY4XELD From United States of America, joined Mar 2000, 851 posts, RR: 16 Reply 9, posted (7 years 2 months 6 days 23 hours ago) and read 7384 times:
Quoting Lightsaber (Reply 4): But it doesn't address one thing: Service from RDU and CHL is perceived as overpriced. I have no doubt that US will cut prices to match B6 and even grow service. I also have no doubt that this won't be easy at first for Jetblue.
Absolutely! He didn't say a word about WHY the service is overpriced and "sub standard" or "Let's prove them wrong". Way to rally the troops. Instead, he just uses it as a platform to attack jetblue.
I don't think a person who's going to decide whether to take a B6 flight or a US flights going to think "well, USAirways stock DID appreciate by 100% whereas JetBlue's decreased by 20%." They are going to look at ticket price. period.
N670UW From United States of America, joined Jul 2003, 1595 posts, RR: 8 Reply 10, posted (7 years 2 months 6 days 23 hours ago) and read 7357 times:
Quoting Etops1 (Thread starter): In announcing JetBlue's intention to add a handful of regional jet flights
Heh...wasn't this the same US Airways that touted their own Embraer 170's as not being regional jets...that they looked and felt more like mainline jets.
Whatever works for you...
I'm sure Doug will be the first to call US's own E-190's 'regional jets' when they arrive...
Artsyman From United States of America, joined Feb 2001, 4741 posts, RR: 42 Reply 11, posted (7 years 2 months 6 days 23 hours ago) and read 7307 times:
There are fewer remaining. That is where the E190 comes in.
****
Where do the over 100 A320 aircraft still on order fit into your growth plans. Jetblue does not have any real strong new markets that can support these planes.
While they can possibly defer them a little while, eventually all these sorts of things catch up with you. Yesterdays credit downgrade for example is going to cost JBLU a lot of money as now they are paying more for their debt.
Bottom line is this. Jetblue are currently losing money, jetblue's costs can only go up, ability to increase revenue is difficult. They are receiving new A320's every other week, and unless they have places to fly them, and more importantly make money on them, the situation is going to get worse.
I don't think that anyone is suggesting they are going to disappear, but as noted above, the honeymoon is over.
JetMARC From United States of America, joined Aug 2003, 518 posts, RR: 2 Reply 14, posted (7 years 2 months 6 days 23 hours ago) and read 7248 times:
I dont think its fare how people point out jetBlue's ontime performance. The DOT records how delayed flights are, but doesnt take into account how many flights airlines have canceled. During the Blizzard of 2006 in JFK, IAD, and BOS for example... when Delta canceled every flight from BOS, JFK, LGA, BOS, IAD, DCA... we still operated many flights, however significantly delayed. I even worked one of those flights after sitting in my hotel room for 12 hours only to get to the gate and waiting another 3 hours to take off. So, if you'd rather arrive at your destination a few hours late rather than not at all, fly jetBlue. Otherwise, keep your first class seats, award winning mileage programs, business lounges, and cross your fingers that the big boys won't cancel your flight and feel they dont have to provide you any compensations because its "weather related"...
"Sucka, I'm gonna send you out on Knuckle Airlines. Fist Class!!" ~ Mr. T
ScottB From United States of America, joined Jul 2000, 6373 posts, RR: 34 Reply 15, posted (7 years 2 months 6 days 22 hours ago) and read 7137 times:
Quoting JetMARC (Reply 14): The DOT records how delayed flights are, but doesnt take into account how many flights airlines have canceled.
Actually, they do; a cancelled flight does count as a delay. And as a passenger, I'd rather be rebooked on a flight the next day in advance rather than having to sit at the airport for several hours in the hope that the flight might happen. Of course, given jetBlue's load factors, cancelling flights might mean that it could take several days to get stranded passengers to their destinations; a colleague of mine ended up having to wait three days due to the blizzard in February -- in part because B6 took so long to actually cancel his flight and the seats on subsequent days all filled up in the interim.
Going back to Neeleman's comments and Parker's response, US Airways has a well-deserved reputation for overpriced, substandard service. The complaints of dirty planes have been numerous over the past couple of years, and the high numbers of baggage reports and DOT complaints for US don't point to a quality product. And Parker doesn't say a word about US Airways' extortionate prices between CLT and NYC which are going to come crashing down in mid-July. Even with its current troubles, jetBlue still has dramatically lower costs than US Airways and a better product in coach.
Lightsaber From United States of America, joined Jan 2005, 10886 posts, RR: 100 Reply 16, posted (7 years 2 months 6 days 22 hours ago) and read 7073 times:
Quoting LY4XELD (Reply 9): They are going to look at ticket price. period.
Mostly... and perceived experience on the flight (cost to Manhattan, complaints, etc.)
Quoting Artsyman (Reply 11): Where do the over 100 A320 aircraft still on order fit into your growth plans. Jetblue does not have any real strong new markets that can support these planes.
The A320's will go onto routes "seeded" by the A320. Part of what has been hurting B6 is that their two markets that cry for more A320's have maxed out on gates: JFK and FLL. Soon JFK gets the temporary gates. FLL... Well, I guess MIA.
Quoting Artsyman (Reply 11): Bottom line is this. Jetblue are currently losing money, jetblue's costs can only go up, ability to increase revenue is difficult. They are receiving new A320's every other week, and unless they have places to fly them, and more importantly make money on them, the situation is going to get worse.
1. Yes, Jetblue is losing money... that's a given.
2. Costs can be reduced. The biggest cost savings is the huge E190 launch costs. While still high, that will go down with time.
Some of B6's issues are due to insane compitition for DL. How much longer can DL lose money? That I don't know. Long enough to really weaken Jetblue? Probably.
I do agree that B6 needs to start having a plan to make money soon. But then again, they could always sell their first aircraft. (Sorry I couldn't resist.)
Amazing how one $20 million loss is doom and gloom. Oh, I don't pretend B6's future is as bright as it once was. But US isn't the powerhouse they were a few years ago and they haven't yet acheived the true LCC structure. So let's see.
I will admit Neeleman's next presentation will be very scrutinized. But I wouldn't write off B6 yet. Why? Employee optimism, low CASM (unlike DH ), JFK, their mindshare (FLYI never had that), and Neeleman's willingness to admit mistakes (which means, correct them!). We haven't even seen the impact of co-locating route-planning with the yield team yet. Yes, that will take 6+ months. Heck, they are just turning on the "yield optimization" feature of their route planning software.
Werdywerd From United States of America, joined Aug 2005, 488 posts, RR: 1 Reply 17, posted (7 years 2 months 6 days 22 hours ago) and read 7073 times:
For those of you questioning where we will put all of the new aircraft coming in every 7-10 days. The last meeting with Dave Neelman, he stated that we will begin to sell off some of the brand new aircraft that come in to other airlines to slow growth a bit. Instead of us getting a new aircraft every 7-10 days it will be a new aircraft every 20-25 days or so.
Lightsaber From United States of America, joined Jan 2005, 10886 posts, RR: 100 Reply 18, posted (7 years 2 months 6 days 22 hours ago) and read 7000 times:
Quoting Werdywerd (Reply 17): For those of you questioning where we will put all of the new aircraft coming in every 7-10 days. The last meeting with Dave Neelman, he stated that we will begin to sell off some of the brand new aircraft that come in to other airlines to slow growth a bit. Instead of us getting a new aircraft every 7-10 days it will be a new aircraft every 20-25 days or so.
Really? This is *huge* news... Now I know someone will demand a link soon, but I'm going to go with this for now. Did they specifically say *new* aircraft? I almost expected B6 to sell off the older A320's to avoid the MX costs.
This implies that B6 purchased the A320's or E190's below current market value (a la Easyjet's A319's or Ryanair's 738's or WN's 73G's). One aircraft every 20 to 25 days implies 15 to 18 aircraft per year.
While I'm sad to see B6's growth slow, its been obvious its been coming for about four+ months. At least, I've posted that they would sell aircraft for about that long. Yes, I always said sell the *oldest* aircraft which might be incorrect. Thanks for the info.
Dutchjet From Netherlands, joined Oct 2000, 7864 posts, RR: 58 Reply 19, posted (7 years 2 months 6 days 22 hours ago) and read 6952 times:
Quoting Werdywerd (Reply 17): For those of you questioning where we will put all of the new aircraft coming in every 7-10 days. The last meeting with Dave Neelman, he stated that we will begin to sell off some of the brand new aircraft that come in to other airlines to slow growth a bit. Instead of us getting a new aircraft every 7-10 days it will be a new aircraft every 20-25 days or so.
Yes, this is rather big news on several fronts. First, if true, it will slow down JetBlues rapid growth which will be a good thing for the airline and, second, its going to be interesting to see who takes the newly delivered aircraft off of JetBlue's hands (and, as pointed out above, since JetBlue reportedly got a great deal on both the A320s and E190s, selling off some aircraft could be a profit center for the airline).......this will certainly be interesting to watch.
JetBlueAtJFK From United States of America, joined Jan 2005, 1687 posts, RR: 3 Reply 20, posted (7 years 2 months 6 days 22 hours ago) and read 6952 times:
Quoting Werdywerd (Reply 17): For those of you questioning where we will put all of the new aircraft coming in every 7-10 days. The last meeting with Dave Neelman, he stated that we will begin to sell off some of the brand new aircraft that come in to other airlines to slow growth a bit. Instead of us getting a new aircraft every 7-10 days it will be a new aircraft every 20-25 days or so.
Sounds good, they can get money for them and not worry about canceling a contract cost and don't have to worry about new planes coming in constantly and having to put the on new routes. They need to follow what southwest does, is come into a city with a lot of flights and not have one red-eye flight for about 2 years. Like lets take PDX for example. B6 came in with 1X JFK flight (witch they still have), but they could have done 1X JFK, then growing to 3X once established, also have 1X BOS, 1X IAD, 2X BUR, and alos run a flight to Denver on the 190 along with a 190 to SLC. Then add on flights to OAK and SAN. Then after all that, they can be well established in PDX, handle their own flgihts, not get into big wars with any airlines since they only have like one or flight to each city. They would probably be better off with doing this because they might suffer a little in the beggining but then they will come back and get gains there.
But I do think doug had a good statement but he makes US sound like a mightyl strong legacy that has no problems, they shouldn't attack oother carriers by specifically naming them in letters and attcking them, instead if they want to say something, do it indirectly like what Neeleman did and only people like parker can assume they mean them but they never know.
CXA330300 From South Africa, joined May 2004, 1500 posts, RR: 1 Reply 21, posted (7 years 2 months 6 days 22 hours ago) and read 6939 times:
It still amazes me how cocky some CEOs can be.
Quoting Etops1 (Thread starter): US Airways (who they'd counted on being gone by now) is expecting to be profitable in 2006
That is such {insert expletive here}. I wonder if Parker's read the statistic below?
Quoting Lightsaber (Reply 4): 1. US still has a high CASM, according to UA 7.45 Pre-fuel (see slide 15)
However, don't get me wrong. US is a great airline going through a really tough time at the moment. B6 is a really great airline going through some growing pains. I hope both do well.
The sky is the limit as long as you can stay there
Jacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 61 Reply 22, posted (7 years 2 months 6 days 21 hours ago) and read 6917 times:
Quoting Lightsaber (Reply 18): This implies that B6 purchased the A320's or E190's below current market value (a la Easyjet's A319's or Ryanair's 738's or WN's 73G's). One aircraft every 20 to 25 days implies 15 to 18 aircraft per year.
I dont' know too much about the 190's, I know B6 didn't get their A320's for cheap at all...on the order of $33-$36 million/plane...
Quoting SNATH (Reply 6): Whether you agree with him or not, you just have to respect him for writing such a professional and reasonable letter, instead of simply bad mouthing the competition to sound "cool". My hat's off to you, Mr Parker.
Quoting PlaneHunter (Reply 8): caused competiors to update their products.
not in AA's case..
Quoting LY4XELD (Reply 9):
I don't think a person who's going to decide whether to take a B6 flight or a US flights going to think "well, USAirways stock DID appreciate by 100% whereas JetBlue's decreased by 20%." They are going to look at ticket price. period.
the letter clearly was stated to employees, who probably get stock options..
given that DL probably (operative word) won't be going chapter 7, they should be able to streamline their operations more to be competitive, and as you said, hurt B6 a bit...
Quoting Lightsaber (Reply 16): Oh, I don't pretend B6's future is as bright as it once was.
thats why the stock is in the toilet and the bond got downgraded........their future doesn't look as promising as it once did..
JetBlueAtJFK From United States of America, joined Jan 2005, 1687 posts, RR: 3 Reply 23, posted (7 years 2 months 6 days 21 hours ago) and read 6890 times:
Quoting Jacobin777 (Reply 22): given that DL probably (operative word) won't be going chapter 7, they should be able to streamline their operations more to be competitive, and as you said, hurt B6 a bit...
Yea but they can't go back on their old path of killing the markets just to get at B6, if DL competes with B6 a little less then before and builds up their Int'l flights more they should be back on the good road.
Quoting Jacobin777 (Reply 22): Quoting SNATH (Reply 6):
Whether you agree with him or not, you just have to respect him for writing such a professional and reasonable letter, instead of simply bad mouthing the competition to sound "cool". My hat's off to you, Mr Parker.
I agree.
Quoting Jacobin777 (Reply 22): Quoting Lightsaber (Reply 16):
Oh, I don't pretend B6's future is as bright as it once was.
thats why the stock is in the toilet and the bond got downgraded........their future doesn't look as promising as it once did..
Yea but don't say their future is not their. Their future just isn't as bright as before but I don't think for one minute this will bring them down. They just have the growing pains now and the market is far from good now, they will get through it, as will US.
HPRamper From United States of America, joined May 2005, 3702 posts, RR: 8 Reply 24, posted (7 years 2 months 6 days 21 hours ago) and read 6790 times:
Quoting Jacobin777 (Reply 22): the letter clearly was stated to employees, who probably get stock options..
It was just meant to illustrate the relative health of the airlines at this moment. Who would have foreseen it only a year ago?
25 JBLUA320: Sounds like healthy comptetion to me... both airlines have issues, both are working to resolve them. The fire has been lit under both of their asses a
26 John: This is my prediction: jetBlue will inevitably get squashed by the 800 pound gorilla in CLT. After losing their shirt in an intense fare war, they wil
27 Alitalia744: DL's int'l expansion and hub-i-fication of JFK will certainly effect B6 in some ways. People no longer will book B6 from BUF/ROC/etc.to JFK to connec
28 Airlinespotter: Well I agree with you to a certain point, but here is my thing, I rather get to my destination safe and sound in one piece. Canceled a fight during a
29 Jacobin777: true...its probably best for both B6 and DL too not get too "hyper-aggressive" on the competition...raising the fares a little by both will be good f
30 Ca2ohhp: Definately not the case at all, I could only wish...
31 HPRamper: I meant, who would have foreseen that US Airways would be in better financial shape today than jetBlue, a year ago?
32 Diamond: We have two threads running at the same time on this topic. This thread was the 2nd one started (only 2 minutes later than the other). This thread wil
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From Puerto Rico, joined Nov 2005, 865 posts, 
From , joined Dec 1969, posts, 
From , joined Dec 1969, posts, 
Oh, I know B6 has an on-time issue. But they have great customer satisfaction.
And yes B6 will lose money this year. 
From Netherlands, joined Oct 2000, 7864 posts, 
From Germany, joined Mar 2006, 6211 posts, 
Well, I guess MIA. 
From South Africa, joined May 2004, 1500 posts, 
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