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PanAm_DC10
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JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 6:49 am

NEW YORK, March 8 (Reuters) - JetBlue Airways Corp. would consider deferring deliveries of some aircraft or issuing new equity as it seeks to keep its debt under control, its chief executive said on Wednesday.

"We're going to look at (slowing deliveries) very seriously as we look at our routes and where the capability is and where the substantial profitability (is)," David Neeleman, the airline's founder, said at an investor conference. He said the airline, which is forecasting a full-year loss, would also consider selling new shares as it seeks to keep its debt at no more than 75 percent of its total capital.

If the New York-based airline did delay deliveries of aircraft it has on order from Airbus or Embraer , it would be a significant retreat from the aggressive growth strategy the airline has pursued so far.

Neeleman said that given strong demand from airlines elsewhere for both of JetBlue's mainstay planes, the Airbus A320 and the smaller Embraer E-190, it would be easy to defer the planned deliveries. "One of the advantages we have is that we have airplanes that are very desirable on the world market," he said.

The airline is slated to take delivery of 17 A320s this year and 17 next, and 18 E-190s in each of 2006 and 2007, boosting its fleet to 162 planes from 92 at the end of 2005.


[ END - http://www.reuters.com Fair use excerpt ]

Has anyone heard any more on this and is it likely to impact on the Jungle Jets more so than the A320s. Any further info would be appreciated

Regards, PanAm_DC10
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airtran737
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 6:51 am

Wow. At least they're being pro-active and trying to get this under control before it's too late.
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luv2fly
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 6:51 am

Quoting PanAm_DC10 (Thread starter):
Has anyone heard any more on this and is it likely to impact on the Jungle Jets more so than the A320s

Care to explain as they have no jungle jets?
You can cut the irony with a knife
 
tinpusher007
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 6:54 am

Quoting Luv2fly (Reply 2):
Care to explain as they have no jungle jets?

The E-190's. Embraer jets have come to be affectionately known as jungle jets as they are manufactured in Brazil. It doesn't just apply to the 134/145's
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airzim
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 7:04 am

Boy I can't wait to see how the smurfs spin this!
 
jetbluefan1
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 7:04 am

I listened to the press conference in which this was brought up by Neeleman. This was not what was said.

Neeleman said that JetBlue has the option of deferring deliveries. However, what JetBlue is "seriously considering" is selling some of its planes as they become older. He pointed out that the E190 and A320 lines are maxxed out for the several next years, and therefore those aircraft are of high value. He cited growth of the airline industry in China and India, but no specifics.

Overall, I wouldn't take this to mean much at all. JetBlue is simply looking at all of its possibilities. I seriously do not see any slowing of growth.

Neeleman also pointed out that new E190 routes will be announced very soon. The E190s will be flying shorter routes as of now because it is more efficient on such routes, according to Neeleman.

JetBluefan1
 
MD95
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 7:14 am

Quoting JetBluefan1 (Reply 5):
However, what JetBlue is "seriously considering" is selling some of its planes as they become older.

And what do you call an action like this? I call it "fleet reduction" with the same effect of delaying delivery from AIB. I didn't know that Jet Blue was is the aircraft business
dario
 
anstar
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 7:16 am

Quoting JetBluefan1 (Reply 5):
Neeleman said that JetBlue has the option of deferring deliveries. However, what JetBlue is "seriously considering" is selling some of its planes as they become older. He pointed out that the E190 and A320 lines are maxxed out for the several next years, and therefore those aircraft are of high value. He cited growth of the airline industry in China and India, but no specifics.

Perhaps they may have a similar strategy as Ryanair.

Get new planes at a great price, build up the hours and sell them on after 5 years or so. That way they can keep MX costs down and depending on the initial discount with purchasing large numbers, probably wopuldn;t be to much out of pocket!
 
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 7:18 am

Quoting TinPusher007 (Reply 3):
The E-190's. Embraer jets have come to be affectionately known as jungle jets as they are manufactured in Brazil. It doesn't just apply to the 134/145's

Not totally true, the E135's and E145's are known as jungle jets the rest of the planes made by Embraer are actually considered mainline jets as that is what they are.
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timboflier215
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 7:21 am

Quoting Md95 (Reply 6):
I call it "fleet reduction"

not if they are gettin new aircraft at a faster rate than they are selling old ones. its a different way of slowing growth without actually deferring deliveries.
 
JBLUA320
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 7:50 am

Yeah they'd still be growing, though at a slower rate than originally planned. It's damage control-- the industry is tough and jetBlue has no choice but the rethink the strategy.

Sounds smart to me..

JBLU
 
ScottB
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 8:22 am

Quoting JetBluefan1 (Reply 5):
However, what JetBlue is "seriously considering" is selling some of its planes as they become older.

There is a bit of a risk (or a potential upside) in selling older A320's, though. The price JetBlue may be able to fetch for its older A320's may be lower or higher than the depreciated value currently on the books. If it's lower, they'd have to take one-time charges to account for the loss on the sale; conversely, if they fetch a higher price, they can record a one-time gain.

In any case, I suspect they'd prefer to do another equity offering at this point to help keep debt under control. They started out with a bunch of capital in part because they didn't want to have a huge debt load like most airline start-ups.
 
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 9:00 am

Quoting JetBluefan1 (Reply 5):
I listened to the press conference in which this was brought up by Neeleman. This was not what was said.

As soon as I get home, I'll download it.

Quoting JetBluefan1 (Reply 5):
However, what JetBlue is "seriously considering" is selling some of its planes as they become older.

This makes sense to me. The original A320's supposidly weren't on financing (lease) terms as good as later purchases. So if letting them exit the fleet just before they're due for heavy MX makes sense. Do so!

And it keeps down the MX costs.  Wink

Quoting JetBluefan1 (Reply 5):
I seriously do not see any slowing of growth.

Maybe a little. Personally, I don't consider this a bad thing.

Quoting JetBluefan1 (Reply 5):
The E190s will be flying shorter routes as of now because it is more efficient on such routes, according to Neeleman.

 checkmark  Makes sense. Neeleman has been been dropping these hints for a long time.

Personally, B6 getting rid of a few older A320's doesn't phase me. I would like to see B6 grow faster, but if the business case suggests its better to circle the wagons and only grow by say 30 airframes a year... ok. Right now B6's credit rating needs to go up just one fraction of a notch to seriously lower their borrowing costs. If slowing growth in 2006, 2007, and maybe 2008 allows for B6 to raise their credit rating, that will add more money to the books than a few dozen aircraft.

Lightsaber
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chrisnh
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 11:23 am

Aside from how 'desireable' A320s and 190s are, how likely is it that JetBlue's planes will be snatched up on the open market? Configured as they are with special features that other carriers may not want or care about, those planes probably have as much chance of going to the desert as they do to another carrier.

Chris in NH
 
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 12:03 pm

Quoting Luv2fly (Reply 8):
Not totally true, the E135's and E145's are known as jungle jets the rest of the planes made by Embraer are actually considered mainline jets as that is what they are.

I never considered jungle jets to mean regional jets, but I guess maybe you are correct as the E170-E190 are simply called Ejets...semantics if you ask me. The point is if someone says jungle jets to me, I know they are referring to Embraer jets and I would have thought Luv2fly knew that too without splitting hairs...such is A.net.
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 12:59 pm

Quoting JetBluefan1 (Reply 5):
Overall, I wouldn't take this to mean much at all. JetBlue is simply looking at all of its possibilities. I seriously do not see any slowing of growth.

They still have a plane arriving every couple weeks, and fewer and fewer places to put them. AirTran, I'm talking to you too.

Quoting Luv2fly (Reply 8):
Not totally true, the E135's and E145's are known as jungle jets the rest of the planes made by Embraer are actually considered mainline jets as that is what they are.

Says who?
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 1:42 pm

Quoting ChrisNH (Reply 13):
Aside from how 'desireable' A320s and 190s are, how likely is it that JetBlue's planes will be snatched up on the open market? Configured as they are with special features that other carriers may not want or care about, those planes probably have as much chance of going to the desert as they do to another carrier.

I think the extra weight would be minimal, and if it is a problem, then the airlines can remove the equipment at little cost to them probably. As far as configuration, the airlines are bound to put their own interior in the planes anyway. All in all, the expense is probably far less than ordering a new plane, even if they need to make modificaitons.

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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 3:44 pm

Quoting Luv2fly (Reply 8):
Quoting TinPusher007 (Reply 3):
The E-190's. Embraer jets have come to be affectionately known as jungle jets as they are manufactured in Brazil. It doesn't just apply to the 134/145's

Not totally true, the E135's and E145's are known as jungle jets the rest of the planes made by Embraer are actually considered mainline jets as that is what they are.

Pilots I know at carriers flying the E-190 actually DO refer to them as "Jungle Jets." As was mentioned, Embraer being a Brazilian manufacturer earned that moniker for the ERJs, but it now applies to their entire product line. The "E-Jets" moniker is what their marketing department is pushing, but the Jungle Jet name has stuck to their new products as well.
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 3:54 pm

Quoting ChrisNH (Reply 13):
Aside from how 'desireable' A320s and 190s are, how likely is it that JetBlue's planes will be snatched up on the open market? Configured as they are with special features that other carriers may not want or care about, those planes probably have as much chance of going to the desert as they do to another carrier.

Chris in NH



Quoting JBLUA320 (Reply 16):
I think the extra weight would be minimal, and if it is a problem, then the airlines can remove the equipment at little cost to them probably. As far as configuration, the airlines are bound to put their own interior in the planes anyway. All in all, the expense is probably far less than ordering a new plane, even if they need to make modificaitons.

JBLU

Both of you are missing the big picture here on the IFE anyway. Remember that B6 owns LiveTV, so techincally they could offer a relatively good TV MX package as part of a sale of the A/C. It's the initial installation costing roughly $1M US an airframe that keeps alot of airlines away from installing the service. Since the satelittes are already attached to the airframe the only thing that would be needed would be the new seats.
 
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 4:46 pm

Quoting ANstar (Reply 7):
Perhaps they may have a similar strategy as Ryanair.

Get new planes at a great price, build up the hours and sell them on after 5 years or so.

That's not exclusively a practice done by FR. SQ does something similar as well.  Wink

Personally, it's great to see B6 take action before it's too late. Whatever they eventually come up, I'm confident it will keep them afloat for the longterm.
 
willyj
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 5:39 pm

Quoting ChrisNH (Reply 13):
Aside from how 'desireable' A320s and 190s are, how likely is it that JetBlue's planes will be snatched up on the open market? Configured as they are with special features that other carriers may not want or care about, those planes probably have as much chance of going to the desert as they do to another carrier.


So scrapping the planes would bring in more money than selling them because they offer too many amenities? Doesn't make much sense to me. These aren't old planes, and whoever might potentially purchase them would have little trouble discarding the unwanted amenities.
 
EDDM
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 8:12 pm

I met a guy at the airport (MUC) yesterday who was going to TLS to pick up an A320 for B6. So they're not deferring that one.  Smile

He said he'd go to MCO via YYR. Way cool.
 
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chrisnh
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 9:51 pm

Quoting Willyj (Reply 20):
So scrapping the planes would bring in more money than selling them because they offer too many amenities? Doesn't make much sense to me. These aren't old planes, and whoever might potentially purchase them would have little trouble discarding the unwanted amenities.

I guess my point is this: People ofteen have an inflated sense of what their home is worth. They put it on the market and realize--whoops!--people aren't willing to pay the asking price. Happens all the time, and at a time when the market is awash with available planes--in other words, a buyers' market--why wouldn't the same logic apply? All I'm saying is that it might be a bit optimistic to think that some other carrier is going to swoop in on a white horse and take all the planes that JetBlue may make available. That's why I said that there's as good a chance that they'd be heading to the desert as to some other airline.

Chris in NH
 
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PanAm_DC10
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 10:12 pm

Quoting Lightsaber (Reply 12):
Personally, B6 getting rid of a few older A320's doesn't phase me. I would like to see B6 grow faster, but if the business case suggests its better to circle the wagons and only grow by say 30 airframes a year... ok. Right now B6's credit rating needs to go up just one fraction of a notch to seriously lower their borrowing costs. If slowing growth in 2006, 2007, and maybe 2008 allows for B6 to raise their credit rating, that will add more money to the books than a few dozen aircraft

Well put Lightsaber the moreso given Mr Neeleman specifically mentioned that he was acting to protect their Credit Rating.

Regards, PanAm_DC10
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JBLUA320
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 10:39 pm

Quoting Flyibaby (Reply 18):

Both of you are missing the big picture here on the IFE anyway. Remember that B6 owns LiveTV, so techincally they could offer a relatively good TV MX package as part of a sale of the A/C. It's the initial installation costing roughly $1M US an airframe that keeps alot of airlines away from installing the service. Since the satelittes are already attached to the airframe the only thing that would be needed would be the new seats.

I think unless the airline already had PTVs across the rest of its fleet or was planning on getting them, they'd keep the configs consistent between planes because only a select few would have jetBlue's PTV accessability. Despite the price, I think the airline would put a consistent product first... It's not like jetBlue would be selling the entire fleet, just a few planes every now and then... Just my $0.02

JBLU
 
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lightsaber
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 11:21 pm

Quoting Flyibaby (Reply 18):
It's the initial installation costing roughly $1M US an airframe that keeps alot of airlines away from installing the service.

While true and I don't understand why more airlines aren't adopting it, the systems weight also has scared away a few airlines. How significant that is, I don't know,

Quoting PanAm_DC10 (Reply 23):

Well put Lightsaber the moreso given Mr Neeleman specifically mentioned that he was acting to protect their Credit Rating.

Thank you. Ithink... what's Moreso?  Wink I would expand after listening to the conference last night (It's on Jetblue.com/investorrelations). Several things struck me. One, it was that B6 is going to Keep its dept/equity to less than or equal to 75% to defend the bond rating. Since returning aircraft and the bond rating would be related... This makes sense to me. Grow a small amount slow while reducing debt.

What I noticed people aren't talking about from the conference:
1. B6's RASM is improving and they will be working much harder on that (hence the move of route planning and yield management to Queens).
2. Neeleman said that "We will be expanding into 10 cities, maybe a little more." When I heard the "a little more" I really became alert and rewound the speech to make sure I heard correctly.
3. MX costs will remain a small part of B6's total costs.
4. They now have another spare aircraft for the east coast (at BOS) to help mitigate delays.

Hey, maybe B6 will return/sell their oldest aircraft to avoid their first D checks?  bigthumbsup   duck   Wink

There was other interesting stuff, like the high RASM available on short hops on the E190 where he reiterated that the E190 is getting lower fuel burn than expected and they expect 11.5 hours out of each E190 soon.

Lightsaber
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RE: JetBlue Consider's Deferring Deliveries

Thu Mar 09, 2006 11:31 pm

Quoting Lightsaber (Reply 25):
Thank you. Ithink... what's Moreso?

It's late here sir, how about, all the more instead  Smile

Quoting Lightsaber (Reply 12):
This makes sense to me. The original A320's supposidly weren't on financing (lease) terms as good as later purchases. So if letting them exit the fleet just before they're due for heavy MX makes sense

I believe that if IIRC B6 stated when they started operations that they would roll the fleet for that reason in addition to retaining strong residual values. If I'm correct in this the market has moved favourably for them to do so.

Quoting Lightsaber (Reply 12):
Do so!

That sir, is what I believe they are doing  Wink

Regards, PanAm_DC10
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BigOrange
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RE: JetBlue Consider's Deferring Deliveries

Fri Mar 10, 2006 12:14 am

The only thing I've ever heard E-170's called is Wombles.
 
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RE: JetBlue Consider's Deferring Deliveries

Fri Mar 10, 2006 12:25 am

I actually am glad to hear this as it is proving that the industry (at least here in the U.S.) cannot sustain its current fare rates. When you have B6 having to defer a/c, it's time for everyone to agree to increase fares and try to level things out.
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