JetBlue Analysts Say ‘Bring Us the Head of Dave Barger’

[Mike Wise]

http://www.thestreet.com/story/1285...ad-of-dave-barger.html?puc=yahoo&cm_ven=YAHOO

NEW YORK (TheStreet) -- Wall Street has a mean streak, one that is now on display as increasing numbers of airline analysts call for the head of JetBlue (JBLU_) CEO Dave Barger.

In fact, JetBlue shares have traded higher in recent months based on the premise that Barger will soon depart, enabling the carrier to adopt more profit-oriented, consumer-unfriendly measures such as offering less legroom and charging for a first bag.

Shortly after the opening bell on Wednesday, JetBlue shares traded up 17 cents at $12.50. Shares are up 44% year-to-date.

Barger is seen as a symbol of an airline that has tried to be different, offering premium service at coach prices, and that consequently has come up short in the profit department. He has been with JetBlue since 1998, two years before the first flight, and became CEO in 2007.

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On JetBlue's second-quarter earnings call last month, amid growing speculation about his future, Barger declared: "It's no secret that I have a contract through the February 2015 time frame." On Wednesday morning, a JetBlue spokesman said the carrier had no additional comment.

The widespread assumption is that JetBlue President Robin Hayes will replace Barger in February, but Wall Street's preference appears to be for Barger to depart more quickly.

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In the past two weeks, at least four analysts have issued reports encouraging a change in JetBlue's approach, accompanied by Barger's departure.

Cowen and Co. analyst Helane Becker on Wednesday upgraded JetBlue to outperform from market perform and raised her target price to $15 from $10. "Our upgrade hinges on JetBlue re-working its model to increase profitability," Becker wrote. "This may include a management change. ... We believe JetBlue could make a management change at the top in order to foster a change in strategy throughout the company.

"Given the company's long history of underperformance in margins and in ROIC, we believe a management change is almost inevitable," she said.

A first bag fee would add 26 cents to annual earnings per share, Becker concluded. Charging for Wi-Fi, now free, would add 9 cents. And adding 12 seats to each A320 -- cutting back on legroom in coach -- would add 18 cents. That "might hurt JetBlue in the media (but) the revenue benefit to the company would probably trump any customer push back," she wrote.

No love from WS or these analysts. I think the Jetblue model is great, why fix something that's not broken? . Sad to see Barger leave, and even more to see the company expecting to adopt this "profit-oriented" attitude at the price of its brand and what it was originally all about; award winning customer service.

 

[Boris Badenov]

Yeah, but what about our share prices? If they're not going up 25% a quarter, someone needs to be killed!

Goldman is a harsh mistress.

 

[Bandit_Driver]

Slippery slope. If JetBlue because the same as every other product out there then they will lose loyal customers.

 

[Fireflights]

Slippery slope. If JetBlue because the same as every other product out there then they will lose loyal customers.

True, but the greedy b*stards making the decisions feel that "the customers are too lazy to fight this, and their complaints won't get past the mid level CSRs" while they rake in obscene bonuses for higher profits

 

[Mike Wise]

Slippery slope. If JetBlue because the same as every other product out there then they will lose loyal customers.

Agreed, once they lose their identity, they lose what I think is the advantage they had over other airlines, IE what made them money.

The most common statement I heard at the gates "I would rather pay the extra and fly jetblue, just to avoid flying american, delta or southwest"

 

[Mike Wise]

True, but the greedy b*stards making the decisions feel that "the customers are too lazy to fight this, and their complaints won't get past the mid level CSRs" while they rake in obscene bonuses for higher profits

I wonder how long those higher profits and bonuses would last for before it all balances out.

 

[Bandit_Driver]

I"ve heard it too when jumpseating on them.

 

[Bandit_Driver]

I wonder how long those higher profits and bonuses would last for before it all balances out.

I don't think it will be too long and I think they would get a lot of negative press and lost people quickly after the changes. Just raise the ticket prices 10-15 bucks....

 

[Fireflights]

I wonder how long those higher profits and bonuses would last for before it all balances out.

Doesn't matter to them.... They reached their revenue goals, they got their bonuses, and when there's not a huge drop in seats sold, they'll add more fees and raise prices to hit the next set of goals. Eventually the market won't be good enough to let them hit their arbitrary targets, and you'll see cutbacks and furloughs.

"It's all about the Benjamin's.....f*** service!"

 

[hook_dupin]

Agreed, once they lose their identity, they lose what I think is the advantage they had over other airlines, IE what made them money.

+2

The cheap charge-for-everything market is a crowded fray.

 

[z987k]

I"ve heard it too when jumpseating on them.

I'll jumpseat them over any other carrier if available. Not saying much considering what I pay, but I'd also buy a ticket on them to. Such a better product.

 

[skypilot6]

The most common statement I heard at the gates "I would rather pay the extra and fly jetblue, just to avoid flying american, delta or southwest"

I did this exact same thing for my vacation this summer. What little extra money it cost to fly jetBlue is worth it.

 

[wheelsup]

I hope they go this route only because then it would be easier to compete with them!!

 

[ZapBrannigan]

Good point

 

[etflies]

...and the bean counters strike again.

 

[Bandit_Driver]

I'll jumpseat them over any other carrier if available. Not saying much considering what I pay, but I'd also buy a ticket on them to. Such a better product.

If you can take the two legs. FedEx and UPS really treat a jumpseater very very well...

 

[z987k]

If you can take the two legs. FedEx and UPS really treat a jumpseater very very well...

They do, but sometimes having an extra 3 hours at home is worth it.

 

[JustinS]

That would be disappointing if what makes them JetBlue goes away. I got a chance to fly on JetBlue for the first time a few weeks ago, and I was really impressed with their service.

 

[99driver]

Had a visit with Joel Peterson a couple years ago. He told me what makes JB different is that they stay profitable w/o chasing every penny in bag fees etc., and the customers stay loyal as a result.
It seems to me they are chasing the immediate buck, not the long term health of the company. But that is how corporate America is set up... to get the immediate buck. Long term solvency is not considered much.

 

[Autothrust Blue]

...and the bean counters strike again.

Universal truth, right here.