God, do I love this airline. Holly Hegeman, who runs PlaneBusiness.com is also a regular contributor on TheStreet.com where she writes "Wing Tips" a column about airline stocks. In her recent contribution from this past Thursday, Holly explains that David Neeleman visted the Raymon James Growth Airline Conference at the Grand Hyatt Hotel in New York City. Holly, theorized that this meant Neeleman was thinking of taking JetBlue (B6) public soon. Below are some fabulous news for B6 lovers, employees, and future possible stakeholders:
But there was also one oddball in the bunch yesterday -- and that airline was JetBlue.
Yes, that privately held carrier, which we have said positive things about in the past, was there. Or rather, David Neeleman, the wunderkind CEO of JetBlue, was there, making a presentation about the airline.
Airline investors -- read my lips! This is great news!
The fact that Neeleman was there at all indicates to me that JetBlue is probably contemplating going public before the end of the year -- depending on market conditions. Personally, I don't think it would matter what the market does. No matter when the stock were to go public, I think the interest in the issue will be overwhelmingly positive.
So what did Neeleman reveal that we didn't already know? Hard and fast numbers -- which supports our feeling about the airline's business plan, business culture and financial management.
JetBlue, which was capitalized with an initial $130 million, the largest capitalization of any start-up airline, began flying out of New York's John F. Kennedy Airport last February. Its first profitable month was August. (Thats 6 months! Sure beats the dot coms!) Last week, JetBlue hit the 50% milestone in terms of the percentage of passengers booking flights on its Web site. (50%!, you know what that number was for, say TWA? like 5!) Here's why that matters: It costs JetBlue about 25 cents for each booking over the Internet , vs. the industry average of 50 cents. Compare that to the average airline's cost of a reservation handled by a travel agent: $8.50. ($8 a reservation they save? Unbelievable!)
JetBlue's Internet performance pushed it ahead of longtime industry leader, Southwest Airlines, which books about 35% of its flights directly over the Web. Most major airlines are less Web-friendly, posting less than 10% of their flights over the Internet.
Suppose, though, someone is Internet-challenged and has to call JetBlue directly. Guess who they will talk to? A friendly JetBlue reservation agent who is in his or her own home. Yes, that's right. All of the reservations personnel work out of their own homes. (Now thats cost savings baby!) Neeleman said the company has a backlog of 1,200 people who want one of these jobs. (Bet one of you airliners.net freaks want one these jobs!)
Costs. Get the picture here? The airline is obsessed with containing costs. Just as Southwest Airlines is, WestJet (WJA:Toronto) is in Canada and Ryanair is in Ireland. (See a pattern here?)
You may recall that Neeleman was one of the founders and original board members of WestJet, and was VP at Morris Air, which Southwest Airlines purchased in 1994. Herb Kelleher, CEO of Southwest, was so impressed by Neeleman's potential (language is a little too colorful, but Holly is trying to drive the point home) that he forced him to sign a five-year noncompete agreement. The agreement ended in 1999, and hence, we now have JetBlue.
Herb knows how to pick 'em.
On with the hard numbers. Neeleman said JetBlue flew approximately 230 million available seat miles with 10 aircraft in December. This equates to the aircraft being flown approximately 13-14 hours a day.(Awesome efficiency, awesome!) It also means that the airline is producing 23 million available seat miles per aircraft, which is very high. So, productivity is at the top of the industry.
For the year ended Dec. 31, the airline produced an overall on-time performance of 80%, which is more than acceptable. Again, this figure beats the year 2000 record of most of the other U.S. domestic airlines.
Yes, and we would remind you that the bulk of that flying is on the East Coast, and the airline flies out of JFK.
And when the weather does turn ugly, Neeleman said, "We can't control the weather, but we can certainly control the way we react to weather."
From what we can tell, JetBlue puts its money where Neeleman's mouth is.
Last weekend, a JetBlue aircraft slid off the runway in icy slush after arriving at JFK from California. The N.Y. Port Authority helped transport passengers and their baggage off the aircraft, JetBlue gave them food and drink, comment cards (to gauge how passengers felt about their treatment) and, oh yes, JetBlue also gave them a credit to use on a future flight. The amount? The cost of their ticket from California.
In another instance where a flight was held up because of a weather delay, Neeleman said, the pilot walked out of the cabin and offered the use of his cell phone to any passenger who wanted to call friends or family to alert them of the delay. (Absolutely unbelievable!)
Oh, and JetBlue's cost per available seat mile? Neeleman said it's running at about 5 1/2 cents per mile , (Ha!, isn't US Air's like 30 cents?) excluding profit-sharing contributions. Roughly 7 cents a mile, if you include the cost of sharing profits with its employees. This includes the cost of fuel. Got that?
Growth plans call for JetBlue to add 11 brand new Airbus A-320s this year and another 10 in 2002.
We like to describe JetBlue as Southwest Airlines, only updated and improved.
Hey, David, just go ahead and set up the IPO.
My check's already written. (as is mine)