JetBlue resets with new CEO Joanna Geraghty, airline veterans

A JetBlue Airways plane prepares to take off from LaGuardia Airport in New York.

Leslie Josephs | CNBC

In the 24 years since JetBlue AirwaysIn its first flight, the New York-based airline pushed the boundaries for a carrier of its size. Today, thanks to the recruitment of experienced executives and cost reduction, the company is trying to get back to basics.

JetBlue was a pioneer in seat-back entertainment, free Wi-Fi, good snacks, and a business class cabin with reclining seats that debuted at lower prices than its competitors. More recently, it has ventured across the Atlantic with flights to London, Paris, Amsterdam and Dublin. And until a judge blocked the deal last month, the company planned to buy a low-cost airline. Spirit Airlines for $3.8 billion. (The carriers are appealing this decision.)

While JetBlue has never lacked for big ideas, it has not lacked for profits, cost control and reliability. These challenges will be a priority for new CEO Joanna Geraghty when she takes the helm on Monday, succeeding Robin Hayes.

Geraghty, 51, has worked at JetBlue for nearly two decades, most recently as president and chief operating officer. In naming its CEO, the company is promoting an insider who knows the complexities of running an airline with idiosyncrasies like New York's congested airspace.

She is the first woman to lead an American airline.

Joanna Geraghty, president and chief operating officer of JetBlue Airways Corp., speaks during a panel discussion at the World Aviation Festival in London, United Kingdom, Thursday, September 5, 2019.

Chris Ratcliffe | Bloomberg | Getty Images

“The main strategic challenge we have always faced is how to thrive as a small player in an industry dominated by four major airlines,” Geraghty said during a Jan. 30 earnings conference call, referring to has American, Delta, United And South Westwhich control around 80% of the domestic market.

Last week, JetBlue announced that it had rehired the airline's former chief commercial officer, Marty St. George, 59, as president. St. George left the carrier in 2019 after 13 years and most recently worked at Latam Airlines as a commercial director. St. George, who also held positions at United Airlines and US Airways, is highly regarded by industry observers for his experience and good relationships with front-line workers.

“Marty will be a much-needed force for good at JetBlue in improving the airline's operational focus and reliability,” said Henry Harteveldt, a former airline executive who runs the consulting firm Atmosphere Research Group. “Legroom doesn’t matter, snacks don’t matter if your schedule can’t be trusted.”

Tyesha Best, president of Transportation Workers Union Local 579, which represents JetBlue's roughly 6,000 flight attendants, said members are “hopeful” because of St. George's return, but that the airline urgently needed to improve crew scheduling and staffing, especially for business. mint class cabin.

“Our quality of life is still not where it should be,” Best said.

JetBlue also promoted Warren Christie, 57, who was previously responsible for safety, security, fleet and airport operations, to take over Geraghty's role as COO.

Back to basics

Geraghty, whom JetBlue declined to make available for an interview, will have to convince investors and customers of the company's turnaround.

JetBlue's last annual profit was in 2019, before the pandemic. Wall Street analysts do not forecast profits until 2025, while other carriers have already returned to profitability during the sharp rise in post-Covid travel. JetBlue shares are down 29% over the past 12 months, while NYSE Arca Airline the index is up almost 6% over this period.

JetBlue ranked ninth in on-time performance among U.S. airlines from January to November 2023, with fewer than 67% of its flights arriving on time, according to the Department of Transportation.

“As we operate in one of the most complex and demanding airspaces, operational reliability is at the heart of all our priorities, helping us deliver a better customer experience while improving revenue with fewer refunds and disruption vouchers and better costs as we mitigate overtime and bonuses. pay,” Geraghty said during the earnings call.

The company plans to further outline the $300 million in new revenue initiatives at an investor day in May, and said last month it was on track to cut costs by up to $200 million. dollars by the end of the year.

“We were given the appetizer but the main course is only available at the investor day,” said Brett Snyder, president of the travel assistance company Cranky Concierge and the website Cranky Flier. “They're hiring the right people. I'm cautiously optimistic for the first time in years.”

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JetBlue recently announced cost reductions: offering staff buyouts, deferring some capital expenditures on planes, reducing unprofitable routes, and reducing frequencies on some routes to prioritize planes aimed at more lucrative ones, such as travel. high-end leisure and regular business of guests visiting friends and relatives.

Snyder said JetBlue will have to take a long, hard look at its network to remove what isn't working and make tough decisions, like giving the system more slack to improve operation.

“Customers expect good service, and when they don’t get it, they talk about it,” Geraghty said in an interview with CNBC in 2019. She said the airline at the time “was leaving this delicate stage of adolescence and becoming an adult. “.

Spirit in the air

A JetBlue Airways plane sits on the tarmac at Fort Lauderdale-Hollywood International Airport January 31, 2024 in Fort Lauderdale, Florida.

Joe Raedle | Getty Images

Spirit shareholders ultimately rejected the cash-and-stock deal with Frontier and voted in favor of JetBlue's acquisition of Spirit, a deal JetBlue argued it needed to better compete with its then-competitors. that planes and space are limited for growth in the United States.

The Justice Department sued to block the deal in March 2023, arguing it would reduce competition, and in January a federal judge sided with the DOJ.

JetBlue and Spirit said they are appealing the decision, although analysts are skeptical of a reversal. Investors have seemed relieved so far that JetBlue isn't paying $3.8 billion for Spirit, which had a market cap of $726 million as of Friday's close.

Last week, Spirit executives sought to allay fears about the airline's future, potentially without a JetBlue takeover, even as Spirit finds itself in dire financial straits, in part because of a recall of Pratt & Whitney engine which grounded dozens of its planes.

Geraghty said last month that JetBlue disagreed with the judge's decision to block the merger and added that if the airlines don't win on appeal, “we need to be prepared with our organic plan.”

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