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jfklganyc
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JetBlue Bad Q1 Results

Tue Apr 25, 2017 12:30 pm

http://otp.investis.com/clients/us/jetblue_airways/usn/usnews-story.aspx?cid=981&newsid=44832


A profit is a profit, but for a smaller, supposedly nimble airline, this carrier has problems:


Out of control costs
Slowing growth
Fleet Review
Unresolved Pilot contract which will really increase costs
 
commavia
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 12:33 pm

Cue the Wall Street analyst questions about too much capacity growth depressing unit revenue in 3, 2, 1 ...
 
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STT757
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 12:43 pm

They beat expectations, however as you pointed out they have some issues on the horizon.

1. They're getting to the point where they have staff approaching 20 years of service, it's easy to control costs when your most senior staff have 10 years or less. Same thing with their fleet, costs to maintain a plane that's younger than ten years of age is less than an aircraft nearing 20 years of service.

2. They need to find new growth opportunities, when they're launching JFK-DAB you know they've already picked all the ripe markets from that hub. And BOS and FLL are in a similar situation, unless they add some long range aircraft to launch South America and Europe they're reaching maturity in all their hubs.

3. They got shut out of the West Coast, both with the AS/VX deal and LGB balking at the FIS.

4. Where can they grow?
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lightsaber
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 12:48 pm

Yet beat estimates.
$85 million profit
Improved RASM expected in 2017
http://www.marketwatch.com/story/jetblu ... 2017-04-25

JetBlue will be increasing seat count to 162 up from 150.

Yes, costs went up. In my opinion what is hurting JetBlue is a lack of hubbing so smooth out demand and the expansion of ULCCs.

Time to expand MINT to gain higher profit customers (in work). And a mid-America hub. Long term, the A321LR will balance out BOS and JFK.

Lightsaber
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tphuang
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 12:59 pm

this is a lot of doom and gloom for an airline that's 1/4 the size of united and achieved about the same net income in Q1.

Their CASM ex-fuel is still in low 8 cent range and the legacies are over 10 cent and close to 11. It's up 3.3% ex-fuel vs a year ago. United is up 5.9% ex-fuel and Delta is up 5.8%.
 
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tlecam
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 1:31 pm

I think that the Q1 profits are solid. As an investor, I do have questions about the long term financials. What is the profitable growth plan?
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PanzerPowner
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 1:35 pm

Get rid of the old A320s, i'm sick of the old grey seats and the IFE which flickers.
Well uh, I obviously decided to refine this but i dont know how.
 
jetbluefan1
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 1:49 pm

"Bad" is a relative term. How did B6's competitors do when comparing against Q1 2016 results? From what I can see, all US airlines that have reported so far have shown significant decreases in earnings - mostly due to (1) increased fuel costs and (2) mediocre revenue trends.

jfklganyc wrote:
http://otp.investis.com/clients/us/jetblue_airways/usn/usnews-story.aspx?cid=981&newsid=44832


A profit is a profit, but for a smaller, supposedly nimble airline, this carrier has problems:

Out of control costs
Slowing growth
Fleet Review
Unresolved Pilot contract which will really increase costs


Re: costs - the ex-fuel CASM number from this quarter is quite high, but B6 management stated this increase is front-loaded to the first half of the year, and is in large part driven by shorter average stage length. For the full year, B6 expects a 1.5%-3.5% ex-fuel CASM increase.

Re: fleet review - I'm not sure if this a "problem" rather than a key component to remaining "nimble". The less-than-favorable view of the E190 is nothing new.

STT757 wrote:
They beat expectations, however as you pointed out they have some issues on the horizon.

1. They're getting to the point where they have staff approaching 20 years of service, it's easy to control costs when your most senior staff have 10 years or less. Same thing with their fleet, costs to maintain a plane that's younger than ten years of age is less than an aircraft nearing 20 years of service.

2. They need to find new growth opportunities, when they're launching JFK-DAB you know they've already picked all the ripe markets from that hub. And BOS and FLL are in a similar situation, unless they add some long range aircraft to launch South America and Europe they're reaching maturity in all their hubs.

3. They got shut out of the West Coast, both with the AS/VX deal and LGB balking at the FIS.

4. Where can they grow?


I still think B6 is well positioned for future growth opportunities. B6 still has quite a few more domestic markets to enter from its BOS hub, and still has a ton of filling in the dots from FLL. Additionally, once B6 makes a decision about its A321LR options, we will get an idea of the growth blueprint over the next decade. Western European and deep South American flying from the JFK/BOS/FLL (and, to a lesser extent, MCO) focus cities are almost certainly on the docket.

Agreed that the US West Coast still remains in limbo, and produces no obvious growth opportunities other than the bulking up of Mint markets. But given the growth opportunities afforded by its East Coast focus cities, perhaps the situation isn't so dire. The same could be said about AS/VX, but on opposite coasts.

tphuang wrote:
this is a lot of doom and gloom for an airline that's 1/4 the size of united and achieved about the same net income in Q1.

Their CASM ex-fuel is still in low 8 cent range and the legacies are over 10 cent and close to 11. It's up 3.3% ex-fuel vs a year ago. United is up 5.9% ex-fuel and Delta is up 5.8%.


That's the key - keep CASM growth below competitors. Did UA or DL record a significant decrease in average stage length as well? This could explain some of the growth in ex-fuel CASM...
 
bfitzflyer
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 1:51 pm

Jet Blue I personally think has a problem with it's route structure. It has two big hubs both in the NE and they are both strong. Where the problem is, is that at least 50 percent of their routes are to leisure destinations, Florida and the caribbean. I know they fly to a lot of other places, but would love to know the percentage of their routes to Florida and the Caribbean as these are not the type of routes that you get a big premium on generally.
 
Rdh3e
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 2:18 pm

STT757 wrote:
3. They got shut out of the West Coast, both with the AS/VX deal and LGB balking at the FIS.

4. Where can they grow?

In my eyes, the AS acquisition of VX increases the likelihood of an eventual AS/B6 merger. In 3-5 years perhaps? If SY continues to have contentious relations perhaps a combo there? It's very expensive to organically grow a hub from scratch so I don't think they would go down that road unless forced to by being blocked from a merger by regulators.
 
jumbojet
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 2:26 pm

JetBlue also needs to work on its very high rate of cancellations and delayed flights. Every day, they seem to rank the worst on flightaware.
 
richierich
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 2:26 pm

jfklganyc wrote:
http://otp.investis.com/clients/us/jetblue_airways/usn/usnews-story.aspx?cid=981&newsid=44832


A profit is a profit, but for a smaller, supposedly nimble airline, this carrier has problems:


Out of control costs
Slowing growth
Fleet Review
Unresolved Pilot contract which will really increase costs


I'm not disagreeing there are problems, but all is not bad.

"Out of control" costs implies that the JetBlue management has no handle on it, I'm not sure I am hearing that. With the focus in New York and Boston, and a main headquarters in Queens, costs will be higher relative to other non-NYC based carriers. Pretty sure they knew that when they selected NY as their HQ. Costs are obviously a major consideration for the airline, and the executive leadership team at the airline appears to be addressing that. As for maintenance, obviously that is going up based on older aircraft, but I cannot imagine it's unknown or unexpected, is it? Adjusting seating configs and improving airport experiences costs money, a lot of it upfront, as does entering markets like ATL (albeit on a small scale) with the benefits to be felt over a longer period.

Growth is relative. Yes, B6 is slowing growth by deferring deliveries and other measures, but it is hardly like they are shrinking away. They are basically adding the equivalent of ten A320s by adding seats to the existing fleet, even if they are adding a relatively small number of frames. Slowing growth based on market performance, they've been through this before, about 10 years ago if I recall, and survived. To dismiss JetBlue at this point is ludicrous and they are not going anywhere. In fact, in the light of all recent mergers, the JetBlue brand is stronger than it has ever been, and there are still domestic opportunities for growth.

Fleet review - I'm curious to hear the guidance on this. Could the E90s be reaching the end of the line? Would be sad to see from a customer perspective.

Pilot contracts - they are hardly alone here. I don't think the pilots are about to strike but who knows.
None shall pass!!!!
 
Abeam79
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 2:29 pm

The topic thread needs to change. Did the topic starter read into the competitors results? All have negative margins and worse metrics.
I think they are poised for connecting the big o&d northeast/south florida international markets with long haul in the future to increase its revenue portfolio. Overall wall st looks happy with their results. Up 4% within the first hour.
 
richierich
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 2:41 pm

jumbojet wrote:
JetBlue also needs to work on its very high rate of cancellations and delayed flights. Every day, they seem to rank the worst on flightaware.


I would think that part of that is having the vast majority of their flights touching the Northeast. Obviously JetBlue doesn't have a DFW or ORD hub to prop up the numbers when bad weather or ATC delays affects airports like JFK or BOS. I don't have the numbers in front of me, but I am guessing if you looked at all airlines in JFK/LGA/EWR and BOS, their delays/cancellations would not be significantly different. Additionally, airlines like your beloved Delta like to mask their true statistics by pushing the delays and cancellations down to their regional carriers before it affects the mainline routes, thus reducing the impact to their statistics. There is nothing wrong with that, but the numbers don't always reflect the whole story.
None shall pass!!!!
 
QueenoftheSkies
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 2:52 pm

Mind you this is with low fuel prices. If there were to be a hike in Jet-A, the darling would be screwed big time.
 
nine4nine
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 2:55 pm

B6 really missed the boat on the west coast ops. Using a politically operated fiasco LGB as its focus city out west with its slot constraints and at the time modular trailers as gates while they should have opted for a less restrictive option. They missed out on SEA as DL jumped in to battle AS, AS has massively built up PDX and SAN and now SFO and SJC, WN has a foothold on OAK, SMF and LAX has very few gates available to operate an abundance of flights for B6. ONT is a ghost town, SNA is pretty much full, the only place I can see them adding 20+ daily is BUR. Other than a few short hops from LGB and a slew of transcons to BOS, JFK, and FLL B6 has relatively little wet coast presence.
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Italianflyer
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 3:14 pm

RE: HQ in Queens: NYC and NY State threw allot of $$$ at B6 to keep them from moving to MCO. Expensive departments (like training) are in Florida already so I don't see that as a big issue.
RE: West coast shut out: the population density west of the Rockies is a fraction of that east of the Mississippi. WN, AS, AA and a burgeoning DL will fight it out there will be blood. B6 sitting this one out may be a financial blessing.
RE: Growth: I agree that viable domestic markets from JFK and BOS are close to being maxed out. DL and WN have made pre-emptive strikes at east coast-heartland markets so the value proposition of B6 opening places like CMH,IND,MCI,etc. isn't as compelling. I have a feeling they will look at domestic p2p,seasonal and > daily flying. Maybe see things like ORD-AUS or PIT-MSY on the horizon.
 
MIflyer12
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 3:15 pm

nine4nine wrote:
B6 really missed the boat on the west coast ops.


One could argue just as well that AS really missed the boat on East Coast ops. Neither AS nor B6 has the size to demonstrate a fully national network. They are both successful in what they do - AS relatively more so (in terms of profit margin) than B6.

I would argue that B6 doesn't have a CASM problem - it's a RASM problem. Flyers won't (don't) pay for what is a very good domestic coach product. B6 continues to score well is customer satisfaction surveys but this graphic - from ALK's March 2017 investor day presentation - shows lagging avg fares.

Image
 
jbs2886
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 3:29 pm

Interesting fleet developments:

Swapped 2018 A321neos to A321ceos.
Deferred 8 aircraft from 2019 to 2023 (13 A321neo now to be delivered).
Deferred 5 aircraft from 2020 to 2024 (6 A320neo and 7 A321neo to be delivered).

http://blueir.investproductions.com/~/m ... tation.pdf

Edit: I'm curious why the swap for 2018. Better deal? Concerns with engine? Avoiding a new fleet "type"? Maybe some combination.
 
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Polot
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 3:41 pm

jbs2886 wrote:
Edit: I'm curious why the swap for 2018. Better deal? Concerns with engine? Avoiding a new fleet "type"? Maybe some combination.

Probably a side effect of the continuing Neo engine delays (B6 chose PW). Airbus has been offering extremely attractive pricing on the Ceo to help fill A320 production as PW tries to ramp up engine production and get back on track. NK also converted a few Neos to Ceos last month. Its a win win for all parties. B6 gets cheaper planes, Airbus maintains A320 production/deliveries, PW gets some relief in trying to catch back up the backlog.
 
FlyUSAir
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 4:04 pm

B6 does have some issues they have to kink out, but to the dismay of some on here they aren't going anywhere anytime soon. I do agree though the network (leisure mainly out of JFK and BOS) hurts them along with needing a fleet review.
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tphuang
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 4:22 pm

jbs2886 wrote:
Interesting fleet developments:

Swapped 2018 A321neos to A321ceos.
Deferred 8 aircraft from 2019 to 2023 (13 A321neo now to be delivered).
Deferred 5 aircraft from 2020 to 2024 (6 A320neo and 7 A321neo to be delivered).

http://blueir.investproductions.com/~/m ... tation.pdf

Edit: I'm curious why the swap for 2018. Better deal? Concerns with engine? Avoiding a new fleet "type"? Maybe some combination.


Well, that was a disturbing investor call if you are hoping for more growth.

The entire thing seems to be Jetblue bowing down to Wall Street's demand from greater capacity discpline.

Basically, slower capacity growth and looking for greater cost savings. E-Jets get further deferred. 2019 to 2021 was supposed to be when they do the major growth of A321 fleet, but that's been deferred over 2 more years.

They added too much capacity on Newark to florida and cuban market, so that's been cut back.

Basically, slower growth everywhere. That's what I heard.
 
Flighty
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 4:32 pm

Just how big do you expect them to get? And why?

I am impressed as hell that JetBlue has made it this far, and still makes money, given the weaknesses that they have.
 
atlflyer
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 5:05 pm

Any mention on progress of remodeling the older A320s? It's a big experience difference getting on the new A321s vs the older A320s.
 
Indy
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 6:01 pm

JetBlue is going to have to rethink the markets it serves. Adding more seats is not going to solve problems. In fact it will make theirs worse. Cramming more people in and making yourself ordinary is not the way to stand out and succeed if your strategy is to serve very saturated markets like the NE and Florida. Endless opportunities exist in the central U.S. but JetBlue chooses to concentrate on already heavily served markets. It is a recipe for failure. You can get away with it to some extend when you have a special or exceptional product. But when you make yourself ordinary and have to keep the lowest fares just to fill seats, you are taking a dangerous path. Maybe you are profitable today, but the writing is on the wall.
Indy = Indianapolis and not Independence Air
 
PlanesNTrains
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 6:04 pm

1. I wonder how LGB performs relative to their other focus cities?
2. When does a regional partner come into play?
3. Will Mint be introduced to any A320s?
4. VX would have likely helped some of their margins moving forward via LAX/SFO growth vs secondary airports.
5. What will the new pitch be in Y on 162 seat A320s?
-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
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Polot
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 6:14 pm

PlanesNTrains wrote:
5. What will the new pitch be in Y on 162 seat A320s?

I believe it is going down to 32" like on the reconfigured A321s.
 
F9Animal
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 6:48 pm

B6 has been pretty quiet lately. I personally am not worried about their future or ability to overcome problems. They managed to survive some of the most difficult conditions ever in the history of the airline industry. I do agree with others in their need to get a good hub in the Midwest, and try to tap more into the West coast.

Is growth really a necessity at this point? Or, would B6 be better off enhancing what they have now? If it isn't broken, why grow more? I know the name of the game is to make more money, but.... The bigger they are the harder they fall. I think it's safe to say, this is a fine airline. It's funny how we doom and gloom over an airline not being as profitable as they should be. A few years ago, we witnessed airlines bleeding money so bad, it was awful. Long live B6!!!
I Am A Different Animal!!
 
PlanesNTrains
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 6:53 pm

Polot wrote:
PlanesNTrains wrote:
5. What will the new pitch be in Y on 162 seat A320s?

I believe it is going down to 32" like on the reconfigured A321s.


Well, better than 31" but not as compelling, at least, not enough to make me pay much more to fly them.
-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
fastmover
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 7:00 pm

jfklganyc wrote:
http://otp.investis.com/clients/us/jetblue_airways/usn/usnews-story.aspx?cid=981&newsid=44832


A profit is a profit, but for a smaller, supposedly nimble airline, this carrier has problems:


Out of control costs
Slowing growth
Fleet Review
Unresolved Pilot contract which will really increase costs



Don't you work at JetBlue?
 
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STT757
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 7:06 pm

PanzerPowner wrote:
Get rid of the old A320s, i'm sick of the old grey seats and the IFE which flickers.


The grey seats look terrible, reminds me of the old PeoplExpress seats.
Eastern Air lines flt # 701, EWR-MCO Boeing 757
 
Sancho99504
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 7:43 pm

I'll probably get flamed and told how much it won't work, but here goes. B6 needs a real spot to have a West coast hub. Obviously SFO, LAX, LGB, SNA, PHX, DEN and SLC are out. That leaves LAS and I believe they're actually sitting on a bunch of empty, unused gates in December, where G4 used to be. With a good schedule, and probably a great place to put the E90 fleet to SEA, PDX, BOI, SMF, SFO, OAK, SJC, SNA, LAX, BUR, ONTARIO, SAN, et al, they can connect them onto A321 or A320 to the east. Flying MSP-SEA would probably still be better connecting over DEN or SLC if you have to connect, but they would still have excellent traffic flow from FLL, TPA, MCO, ATL, MAY, DFW, IAH, SAT, AUS, and from the NE.... Probably a good mid America hub could be CVG or MEM.....
kill 'em all and let God sort 'em out-USMC
 
tphuang
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 7:56 pm

The A320s are said to go through with the reconfiguration this year.
PlanesNTrains wrote:
Polot wrote:
PlanesNTrains wrote:
5. What will the new pitch be in Y on 162 seat A320s?

I believe it is going down to 32" like on the reconfigured A321s.


Well, better than 31" but not as compelling, at least, not enough to make me pay much more to fly them.


It's said to be between 32 and 33. Jetblue claims that the leg room is the same or better with the slim line seating. Still long enough where Jetblue can keep their advertising of having the most leg room. Unfortunately for me, they figured out people are not paying extra for the extra 2 inches.

One thing they did keep mentioning on the phone call is that TATL flights are not a foregone conclusion and they need to see A321LR will provide better return than regular A321NEO on mint routes or HD config. I find that hard to believe since there is not many more places they can fly profitably out of JFK without expanding international routes.
 
lowfareair
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 8:13 pm

Sancho99504 wrote:
I'll probably get flamed and told how much it won't work, but here goes. B6 needs a real spot to have a West coast hub. Obviously SFO, LAX, LGB, SNA, PHX, DEN and SLC are out. That leaves LAS and I believe they're actually sitting on a bunch of empty, unused gates in December, where G4 used to be.


Why are the first airports obviously out more than LAS? LAS is home to large focus cities/small hubs to 4 LCCs/ULCCs that will depress yields, on top of being a very leisure destination in the first place. Some of the above may have some space issues, but LAS seems like one of the least likely in your list. So why are the others obviously out while LAS is a strong option?

As you alluded to, B6 still has practically all of middle America to start flying to. If they figure out how to make the Ejets work or dump then for C series, I could see any of MCI, AUS, IND, CVG, STL, CMH, MEM, etc working for them as a small hub while providing a healthy amount of O&D.
 
ITB
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 8:21 pm

STT757 wrote:
They beat expectations, however as you pointed out they have some issues on the horizon.

1. They're getting to the point where they have staff approaching 20 years of service, it's easy to control costs when your most senior staff have 10 years or less. Same thing with their fleet, costs to maintain a plane that's younger than ten years of age is less than an aircraft nearing 20 years of service.

2. They need to find new growth opportunities, when they're launching JFK-DAB you know they've already picked all the ripe markets from that hub. And BOS and FLL are in a similar situation, unless they add some long range aircraft to launch South America and Europe they're reaching maturity in all their hubs.

3. They got shut out of the West Coast, both with the AS/VX deal and LGB balking at the FIS.

4. Where can they grow?


They can grow at IAD. Several years ago B6 had a much larger presence at Dulles, but they steadily pulled back as CPE continued to rise. Now CPE is falling and is much more reasonable. B6 needs to take a meaningful look at getting bigger at IAD. There are several city pairs that might be ideal for the airline. For instance, IAD-MKE, which is not currently served by any airline. IAD-HAV is another. UA does a lot of seasonal flying to the Caribbean from Dulles; perhaps B6 can do it one better.
 
TransGlobalGold
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 8:31 pm

Rdh3e wrote:
STT757 wrote:
3. They got shut out of the West Coast, both with the AS/VX deal and LGB balking at the FIS.

4. Where can they grow?

In my eyes, the AS acquisition of VX increases the likelihood of an eventual AS/B6 merger. In 3-5 years perhaps? If SY continues to have contentious relations perhaps a combo there? It's very expensive to organically grow a hub from scratch so I don't think they would go down that road unless forced to by being blocked from a merger by regulators.


If, and it's a big if...AS isn't going to be merging with anyone for quite awhile. B6 is a decent airline, they are simply getting left behind by virtue other carriers are getting bigger, and they have a finite number of new destinations they can add from almost saturated hubs.
 
jetbluefan1
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Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 8:33 pm

richierich wrote:
"Out of control" costs implies that the JetBlue management has no handle on it, I'm not sure I am hearing that. With the focus in New York and Boston, and a main headquarters in Queens, costs will be higher relative to other non-NYC based carriers. Pretty sure they knew that when they selected NY as their HQ. Costs are obviously a major consideration for the airline, and the executive leadership team at the airline appears to be addressing that. As for maintenance, obviously that is going up based on older aircraft, but I cannot imagine it's unknown or unexpected, is it? Adjusting seating configs and improving airport experiences costs money, a lot of it upfront, as does entering markets like ATL (albeit on a small scale) with the benefits to be felt over a longer period..


The thought that costs are "out of control" is a bit hyperbolic, and cannot be considered in isolation. B6's ex-fuel CASM is growing slower than some (most?) of its competitors, which is ultimately the key to remaining competitive.

Ex-fuel CASM during Q1 increased 3.3% and is projected to grow 4.5%-6.5% during Q2, largely driven by decreased stage length, increased labor costs (which all airlines are facing to some degree), and timing of maintenance (which is front-loaded this year). However, for the full-year, ex-fuel CASM growth is expected at 1.5%-3.5%, and is projected to grow 0%-1% from 2018-2020. Certainly, to make these types of projections, B6 management must be confident in its ability to keep unit cost creep at a minimum.

MIflyer12 wrote:
I would argue that B6 doesn't have a CASM problem - it's a RASM problem. Flyers won't (don't) pay for what is a very good domestic coach product. B6 continues to score well is customer satisfaction surveys but this graphic - from ALK's March 2017 investor day presentation - shows lagging avg fares.


The problem with the graphic is that average fares are across all cabins. Mint seats are only available on a handful of B6 flights, whereas AS and the other airlines on that graphic (except WN, which has an average fare just $2 more than B6) offer a premium cabin on virtually all flights. I think a more meaningful metric - as you alluded - is stage-adjusted RASM.
 
User avatar
enilria
Posts: 9620
Joined: Fri Feb 22, 2008 7:15 pm

Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 8:49 pm

jetbluefan1 wrote:
richierich wrote:
"Out of control" costs implies that the JetBlue management has no handle on it, I'm not sure I am hearing that. With the focus in New York and Boston, and a main headquarters in Queens, costs will be higher relative to other non-NYC based carriers. Pretty sure they knew that when they selected NY as their HQ. Costs are obviously a major consideration for the airline, and the executive leadership team at the airline appears to be addressing that. As for maintenance, obviously that is going up based on older aircraft, but I cannot imagine it's unknown or unexpected, is it? Adjusting seating configs and improving airport experiences costs money, a lot of it upfront, as does entering markets like ATL (albeit on a small scale) with the benefits to be felt over a longer period..


The thought that costs are "out of control" is a bit hyperbolic, and cannot be considered in isolation. B6's ex-fuel CASM is growing slower than some (most?) of its competitors, which is ultimately the key to remaining competitive.

Ex-fuel CASM during Q1 increased 3.3% and is projected to grow 4.5%-6.5% during Q2, largely driven by decreased stage length, increased labor costs (which all airlines are facing to some degree), and timing of maintenance (which is front-loaded this year). However, for the full-year, ex-fuel CASM growth is expected at 1.5%-3.5%, and is projected to grow 0%-1% from 2018-2020. Certainly, to make these types of projections, B6 management must be confident in its ability to keep unit cost creep at a minimum.

MIflyer12 wrote:
I would argue that B6 doesn't have a CASM problem - it's a RASM problem. Flyers won't (don't) pay for what is a very good domestic coach product. B6 continues to score well is customer satisfaction surveys but this graphic - from ALK's March 2017 investor day presentation - shows lagging avg fares.


The problem with the graphic is that average fares are across all cabins. Mint seats are only available on a handful of B6 flights, whereas AS and the other airlines on that graphic (except WN, which has an average fare just $2 more than B6) offer a premium cabin on virtually all flights. I think a more meaningful metric - as you alluded - is stage-adjusted RASM.

I don't think a single post here recognizes that Mint raises B6's costs. It's just the math. The real question is whether Mint is raising revenue more than cost and I don't think we can say.

For those who haven't gotten it. Mint aircraft have fewer seats. Costs are compared in the industry using CASM. If you have an airplane with a premium cabin versus one with all coach there are fewer seats in the one with a premium cabin. Costs are measured by cost/(seats*miles). By definition if you reduce the seats the costs are going up. Fuel is the same. Labor is the same. Aircraft lease is the same. Airport cost is the same. Catering is more.

Anyway, Mint increases CASM and the larger % they become of the fleet the more CASM goes up.
 
planes112
Posts: 32
Joined: Thu Dec 15, 2016 5:40 pm

Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 9:23 pm

ITB wrote:
They can grow at IAD. Several years ago B6 had a much larger presence at Dulles, but they steadily pulled back as CPE continued to rise. Now CPE is falling and is much more reasonable. B6 needs to take a meaningful look at getting bigger at IAD. There are several city pairs that might be ideal for the airline. For instance, IAD-MKE, which is not currently served by any airline. IAD-HAV is another. UA does a lot of seasonal flying to the Caribbean from Dulles; perhaps B6 can do it one better.



I agree with this. While IAD obviously is not the west coast, there is clearly a large opportunity here. In a way, it is similar to JFK when JetBlue entered it: abandoned by some of the big 3 (AA and DL only fly to their largest hubs), hardly any WN presence, main business airport is full, good (by US standard) rail links to the city (silver line phase 2), and it is an affluent city. There is a lot of things going for major expansion at IAD if they can continue getting the CPE down to normal levels
 
User avatar
Polot
Posts: 9478
Joined: Thu Jul 28, 2011 3:01 pm

Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 9:29 pm

planes112 wrote:
ITB wrote:
They can grow at IAD. Several years ago B6 had a much larger presence at Dulles, but they steadily pulled back as CPE continued to rise. Now CPE is falling and is much more reasonable. B6 needs to take a meaningful look at getting bigger at IAD. There are several city pairs that might be ideal for the airline. For instance, IAD-MKE, which is not currently served by any airline. IAD-HAV is another. UA does a lot of seasonal flying to the Caribbean from Dulles; perhaps B6 can do it one better.



I agree with this. While IAD obviously is not the west coast, there is clearly a large opportunity here. In a way, it is similar to JFK when JetBlue entered it: abandoned by some of the big 3 (AA and DL only fly to their largest hubs), hardly any WN presence, main business airport is full, good (by US standard) rail links to the city (silver line phase 2), and it is an affluent city. There is a lot of things going for major expansion at IAD if they can continue getting the CPE down to normal levels

Sure, if you just ignore the elephants in the room such as UA and DCA and the fact that yet another east coast hub/focus city is not what B6 needs.
 
Sancho99504
Posts: 642
Joined: Sun Dec 11, 2005 2:44 pm

Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 9:58 pm

lowfareair wrote:
Sancho99504 wrote:
I'll probably get flamed and told how much it won't work, but here goes. B6 needs a real spot to have a West coast hub. Obviously SFO, LAX, LGB, SNA, PHX, DEN and SLC are out. That leaves LAS and I believe they're actually sitting on a bunch of empty, unused gates in December, where G4 used to be.


Why are the first airports obviously out more than LAS? LAS is home to large focus cities/small hubs to 4 LCCs/ULCCs that will depress yields, on top of being a very leisure destination in the first place. Some of the above may have some space issues, but LAS seems like one of the least likely in your list. So why are the others obviously out while LAS is a strong option?

As you alluded to, B6 still has practically all of middle America to start flying to. If they figure out how to make the Ejets work or dump then for C series, I could see any of MCI, AUS, IND, CVG, STL, CMH, MEM, etc working for them as a small hub while providing a healthy amount of O&D.


SFO has no gates and is extremely congested and is delay prone
LAX has no gates and is extremely congested
SNA has no slots, gates, curfew
LGB has no slots, gates, curfew
DEN has UA and WN major hubs with some F9 in there with depressed yields
SLC has no gates
PHX currently has limited gates

As far as LAS goes, G4 doesn't pose any threat at all. B6 isn't going after that type of traffic and business travelers don't use NK or G4. The only real hub competition would be from WN and it seems that they're in the process of trying to improve intra-cali and north-South west coast flying to compete against AS, as well as trying to make DEN more O&D instead of 87% connecting. F9, G4 and NK are no threat to a B6 LAS hub.

I think AUS is too far south to be a hub. The rest would be okay, although I don't think STL has the gates at the moment.
kill 'em all and let God sort 'em out-USMC
 
phluser
Posts: 609
Joined: Wed Jun 15, 2016 2:49 pm

Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 10:18 pm

lowfareair wrote:
As you alluded to, B6 still has practically all of middle America to start flying to. If they figure out how to make the Ejets work or dump then for C series, I could see any of MCI, AUS, IND, CVG, STL, CMH, MEM, etc working for them as a small hub while providing a healthy amount of O&D.


If it wants more middle of the country diversification, It should look into PIT or CLE. They are east enough that it's not too far away from B6's home. The last thing it might want is to struggle with long/thin routes to the east, so far away. Yet those markets are west enough to be not coastal, have routes that could be added (like PIT-LAX, MCO competition) to provide connections from the east to the west. And Southwest and Delta haven't gotten their hands on either of them on the scale that has been done at CMH, IND, STL etc. Granted Southwest is growing in PIT more but I think it's still smaller than even MKE.

In the meantime, B6 could just continue connecting the middle of the country spokes to existing hubs, e.g. DEN-FLL, DFW-FLL for example, could be added. It would help buttress those spokes and POS from those markets.
 
Jshank83
Posts: 2898
Joined: Tue Nov 01, 2016 2:23 pm

Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 10:25 pm

Sancho99504 wrote:
The rest would be okay, although I don't think STL has the gates at the moment.


STL has tons of gates. Since it was a former TWA/AA hub it has plenty of gates not in use. WN has slowing been taking them over but I think they have something like 30 open gates left even after WN takes over 4 more this summer. The end of C concourse has 14 not in use at the moment, if they really wanted to come in there they could have those I am sure. Not that I can see them doing it but the option is there.

http://www.flystl.com/uploads/documents ... m_2017.pdf
 
jbs2886
Posts: 2147
Joined: Wed Apr 01, 2015 9:07 pm

Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 10:31 pm

Sancho99504 wrote:
lowfareair wrote:
Sancho99504 wrote:
I'll probably get flamed and told how much it won't work, but here goes. B6 needs a real spot to have a West coast hub. Obviously SFO, LAX, LGB, SNA, PHX, DEN and SLC are out. That leaves LAS and I believe they're actually sitting on a bunch of empty, unused gates in December, where G4 used to be.


Why are the first airports obviously out more than LAS? LAS is home to large focus cities/small hubs to 4 LCCs/ULCCs that will depress yields, on top of being a very leisure destination in the first place. Some of the above may have some space issues, but LAS seems like one of the least likely in your list. So why are the others obviously out while LAS is a strong option?

As you alluded to, B6 still has practically all of middle America to start flying to. If they figure out how to make the Ejets work or dump then for C series, I could see any of MCI, AUS, IND, CVG, STL, CMH, MEM, etc working for them as a small hub while providing a healthy amount of O&D.


SFO has no gates and is extremely congested and is delay prone
LAX has no gates and is extremely congested
SNA has no slots, gates, curfew
LGB has no slots, gates, curfew
DEN has UA and WN major hubs with some F9 in there with depressed yields
SLC has no gates
PHX currently has limited gates

As far as LAS goes, G4 doesn't pose any threat at all. B6 isn't going after that type of traffic and business travelers don't use NK or G4. The only real hub competition would be from WN and it seems that they're in the process of trying to improve intra-cali and north-South west coast flying to compete against AS, as well as trying to make DEN more O&D instead of 87% connecting. F9, G4 and NK are no threat to a B6 LAS hub.

I think AUS is too far south to be a hub. The rest would be okay, although I don't think STL has the gates at the moment.


I think gates could be available at PHX and SLC if they wanted them. But you have a point on SF and others, AS pretty much admitted buying VX was their way in. JetBlue probably saw it the same way - without VX it just isn't practical to try to expand dramatically.

Regardless, I don't think JetBlue wants to get in the competitive fights on the west coast. You have AS/VX expanding in SEA, PDX, SFO, LAX, SAN, and SJC. DL expanding in SEA and LAX. AA expanding in LAX. That is a lot of expansion.
 
Sancho99504
Posts: 642
Joined: Sun Dec 11, 2005 2:44 pm

Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 10:40 pm

Jshank83 wrote:
Sancho99504 wrote:
The rest would be okay, although I don't think STL has the gates at the moment.


STL has tons of gates. Since it was a former TWA/AA hub it has plenty of gates not in use. WN has slowing been taking them over but I think they have something like 30 open gates left even after WN takes over 4 more this summer. The end of C concourse has 14 not in use at the moment, if they really wanted to come in there they could have those I am sure. Not that I can see them doing it but the option is there.

http://www.flystl.com/uploads/documents ... m_2017.pdf


I stand corrected. Thanks for that. I wonder if they could convince the airlines in C to shuffle around to allow B6 to move in to turn it into a hub?
It is definitely in a good spot to connect NE to SW and NW to SE.
kill 'em all and let God sort 'em out-USMC
 
Sancho99504
Posts: 642
Joined: Sun Dec 11, 2005 2:44 pm

Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 10:51 pm

jbs2886 wrote:


I think gates could be available at PHX and SLC if they wanted them. But you have a point on SF and others, AS pretty much admitted buying VX was their way in. JetBlue probably saw it the same way - without VX it just isn't practical to try to expand dramatically.

Regardless, I don't think JetBlue wants to get in the competitive fights on the west coast. You have AS/VX expanding in SEA, PDX, SFO, LAX, SAN, and SJC. DL expanding in SEA and LAX. AA expanding in LAX. That is a lot of expansion.[/quote]

SLC is undergoing a renovation that's going to take a while, which is why there isn't anything available. AS couldn't expand anymore than they already had due to gate space availability. PHX is supposedly adding a new 20 something gate concourse sometime soon, plus WN and AA....

As far as the others expanding, there is still a lot of room for growth out west. Some routes seem over saturated, while many others are underserved or unserved at all. Heck, you find cheaper fares SEA-NYC than SEA-LAX.....
kill 'em all and let God sort 'em out-USMC
 
lowfareair
Posts: 260
Joined: Fri Jun 17, 2016 4:40 pm

Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 11:00 pm

Sancho99504 wrote:
As far as LAS goes, G4 doesn't pose any threat at all. B6 isn't going after that type of traffic and business travelers don't use NK or G4.


Business travelers rarely use LAS except for going to the odd trade show. B6 would NEED a large portion of the leisure traffic to fill the 3-5x/day flights necessary to compete and will need to compete on price with those 3 airlines to gain that traffic.

The only real hub competition would be from WN and it seems that they're in the process of trying to improve intra-cali and north-South west coast flying to compete against AS, as well as trying to make DEN more O&D instead of 87% connecting. F9, G4 and NK are no threat to a B6 LAS hub.


WN still has ~200 flights/day. The other three currently fly to 7 of the top 10 US destinations out of LAS. Of the three they don't compete on, 2 are already flown by B6 and the third is the 250 mile flight to PHX. Of the cities you listed as potential destinations (SEA, PDX, BOI, SMF, SFO, OAK, SJC, SNA, LAX, BUR, ONT, SAN, FLL, TPA, MCO, ATL, MAY (?), DFW, IAH, SAT, AUS), the 3 ULCCs fly to 14 and WN flies to all 20 (I'm not including MAY as I'm not sure what airport that is and DAL/HOU for DFW/IAH).

The E190s you want to base there for West Coast flights have higher costs than Southwest and I'm not sure that B6 would be able to take away enough of the business traffic from Southwest to be that successful.
 
Sancho99504
Posts: 642
Joined: Sun Dec 11, 2005 2:44 pm

Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 11:17 pm

How many destinations does G4 serve daily? How often does F9 change its route map? WN does well at DEN with relatively small amount of O&D. NK serves most of its destinations once daily. The E90 would allow B6 to operate all over the west coast with frequency and wouldn't have 162+ plus seats to fill per flight, which would negate having to drastically reduce fares to fill seats. And that philosophy doesn't work well since B6 decided to go head to head with NK at FLL and they seem to be holding their own. People who choose G4 or F9 probably wouldn't fly on WN or B6 anyways.
kill 'em all and let God sort 'em out-USMC
 
flyby519
Posts: 1430
Joined: Tue Jul 24, 2007 3:31 am

Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 11:21 pm

Sancho99504 wrote:
lowfareair wrote:
Sancho99504 wrote:
I'll probably get flamed and told how much it won't work, but here goes. B6 needs a real spot to have a West coast hub. Obviously SFO, LAX, LGB, SNA, PHX, DEN and SLC are out. That leaves LAS and I believe they're actually sitting on a bunch of empty, unused gates in December, where G4 used to be.


Why are the first airports obviously out more than LAS? LAS is home to large focus cities/small hubs to 4 LCCs/ULCCs that will depress yields, on top of being a very leisure destination in the first place. Some of the above may have some space issues, but LAS seems like one of the least likely in your list. So why are the others obviously out while LAS is a strong option?

As you alluded to, B6 still has practically all of middle America to start flying to. If they figure out how to make the Ejets work or dump then for C series, I could see any of MCI, AUS, IND, CVG, STL, CMH, MEM, etc working for them as a small hub while providing a healthy amount of O&D.


SFO has no gates and is extremely congested and is delay prone
LAX has no gates and is extremely congested
SNA has no slots, gates, curfew
LGB has no slots, gates, curfew
DEN has UA and WN major hubs with some F9 in there with depressed yields
SLC has no gates
PHX currently has limited gates

As far as LAS goes, G4 doesn't pose any threat at all. B6 isn't going after that type of traffic and business travelers don't use NK or G4. The only real hub competition would be from WN and it seems that they're in the process of trying to improve intra-cali and north-South west coast flying to compete against AS, as well as trying to make DEN more O&D instead of 87% connecting. F9, G4 and NK are no threat to a B6 LAS hub.

I think AUS is too far south to be a hub. The rest would be okay, although I don't think STL has the gates at the moment.


Just because it is the only option left doesn't mean it is a good option for B6.

I think they would have better luck bulking up their existing east coast bases with connecting the dots with existing bluecities. Also, adding small-midsized Midwest cities like MKE, MCI, STL, IND to the map. Maybe even take a lesson from Frontier and try some point-to-point Midwest flying. Yes, low yields, leisure, blah blah, but with the right plane (CSeries) I think they could make a profit.

Also, B6 needs to find a way to have a commercial relationship with AS. That's their best option to serve west coast pax.
 
jetbluefan1
Posts: 3278
Joined: Wed Dec 31, 2003 8:39 am

Re: JetBlue Bad Q1 Results

Tue Apr 25, 2017 11:48 pm

flyby519 wrote:
Just because it is the only option left doesn't mean it is a good option for B6.

I think they would have better luck bulking up their existing east coast bases with connecting the dots with existing bluecities. Also, adding small-midsized Midwest cities like MKE, MCI, STL, IND to the map. Maybe even take a lesson from Frontier and try some point-to-point Midwest flying. Yes, low yields, leisure, blah blah, but with the right plane (CSeries) I think they could make a profit.

Also, B6 needs to find a way to have a commercial relationship with AS. That's their best option to serve west coast pax.


:checkmark:

I still fail to see exactly why B6 needs a focus city in the Midwest or West Coast. It's just not a natural fit when one considers B6's core strengths (LatAm, NYC, Boston, FLL). And that's ok...AS has been in business for decades and is the mirror image of B6, but on the opposite coast (obviously with some caveats). Let's also not forget that WN long stayed away from the East Coast. Obviously times have changed, but history doesn't suggest that B6 needs a Midwest or West Coast focus city.

Obviously B6 is very concentrated in the DC-BOS corridor, which presents weather event risk and the normal ATC issues. The growth in FLL and MCO should help alleviate some of these pressures, but it will still be difficult to diversify away fully.

I definitely see B6 and AS eventually growing closer, acknowledging that they need each other in many ways. Code share on non-overlapping routes and eventual merger (think 6- years, maybe more) is not far-fetched.

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