JetBlue reboots with new CEO Joanna Geraghty and airline veterans

In the 24 years since JetBlue AirwaysWith its first flight, the New York-based airline has surpassed the limits of an airline of its size. Now, with the hiring of some veteran executives and cutting costs, it is trying to get back to basics.

JetBlue pioneered seat-back entertainment, free Wi-Fi, good snacks and a business-class cabin with lie-flat seats that debuted at lower prices than its rivals. More recently, it ventured across the Atlantic with flights to London, Paris, Amsterdam and Dublin. And, until a judge blocked the deal last month, it was planning to buy a low-cost airline. Spiritual airlines for 3.8 billion dollars. (The carriers are appealing that decision.)

While JetBlue has never lacked for great ideas, it has fallen short on profits, cost control, and reliability. Those challenges will be a priority for incoming chief executive Joanna Geraghty when she takes the helm on Monday, replacing Robin Hayes.

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

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

Last week, JetBlue said it had rehired the airline's former chief commercial officer, Marty St. George, 59, as president. St. George left the airline in 2019 after 13 years and most recently worked at Latam Airlines as commercial director. St. George, who also held previous positions at United Airlines and US Airways, is well regarded by industry observers for his experience and good relationship with frontline workers.

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

JetBlue also promoted Warren Christie, who was previously head of security, fleet operations and airports, to take over as Geraghty's chief operating officer.

Geraghty, whom JetBlue declined to give an interview, will have to convince investors and customers about the company's recovery.

JetBlue's last annual profit was in 2019, before the pandemic. Wall Street analysts don't predict it will turn a profit until 2025, while other airlines have already returned to profitability in the post-Covid travel surge. JetBlue shares are down 29% over the past 12 months, while the NYSE Arca Airline The index is up almost 6% during that period.

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

“As we operate in one of the most complex and challenging airspaces, operational reliability is central to all of 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 premium pay,” Geraghty said on the earnings conference call.

The company plans to outline the $300 million in new revenue initiatives in more detail during an investor day in May, and said last month that it is on track to cut up to $200 million in costs by the end of the year.

“They've given us the appetizer, but the main course isn't until investor day,” said Brett Snyder, president of travel assistance company Cranky Concierge and the site Cranky Flier. “They're hiring the right people. I'm cautiously optimistic for the first time in years.”

JetBlue has recently announced some cost cuts: offering staff buyouts, deferring some capital expenditures on aircraft, cutting unprofitable routes and reducing frequencies on some routes to prioritize money-making aircraft such as premium leisure travel and stable customer business. who visit friends and family. .

Snyder said JetBlue will need to take a hard look at its network to eliminate what's not working and make tough decisions, such as putting more flexibility into the system to improve operations.

“Customers expect good service, and when they don't get it, they express it openly,” Geraghty said in an interview with CNBC in 2019. He said the airline at the time was “getting out of that awkward stage of adolescence and becoming adults “. “.

JetBlue's most aggressive expansion was its pursuit of low-cost airline Spirit Airlines. It made a surprise bid for the airline in April 2022, when Spirit had already agreed to merge with its discount peer. Border Airlines.

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 against its rivals when planes and space are limited for growth in the US

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 Justice Department.

JetBlue and Spirit said they will appeal the ruling, although analysts are skeptical of a reversal. Investors seem relieved so far that JetBlue would not pay $3.8 billion for Spirit, which had a market capitalization of $726 million as of Friday's close.

Last week, Spirit executives attempted to calm fears about the airline's future potentially without a JetBlue acquisition, even as Spirit faces a difficult financial situation, in part due to a recall of Pratt & Whitney engines that is leaving ground dozens of its planes.

Geraghty said last month that JetBlue disagrees with the judge's ruling to block the merger, adding that if the airlines don't win their appeal, “we need to be prepared with our organic plan.”