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Sunday, October 5, 2014

Wall Street: It F%$#s the Airlines Even Worse than the Airlines F%$# the Airlines

Aviation Week, in reporting a leadership change at JetBlue, notes that much of the impetus for removing the current CEO was because he was too passenger centric: (paid subscription required)

When the JetBlue Airways Board of Directors decided not to renew CEO Dave Barger’s contract but instead elevate airline President Robin Hayes to the top spot, it implicitly endorsed a view held by many on Wall Street that the carrier, while profitable, lags too far behind its rivals.

Barger, an original JetBlue executive, took over in 2007 after the board determined the carrier’s visionary founder, David Neeleman, struggled at running day-to-day operations. Barger quickly fixed the operation, helping it recover from a devastating “valentine” that was delivered on Feb. 14, 2007, when the airline failed to properly prepare for and react to an ice storm that hit the New York area. But like Neeleman, who insisted JetBlue be more refined than its competitors, Barger kept the focus on the customer, preferring not to add baggage fees or seats to aircraft even when most other U.S. carriers adopted both practices.

His resistance to some revenue-generating ideas may have been Barger’s downfall. Despite signaling in recent months he might remain at JetBlue, Barger will be replaced on Feb. 16 by Hayes, a former British Airways executive vice president for the Americas. Hayes is not talking revenue—he has not been saying much at all—but Wall Street analysts say they are hopeful JetBlue will start acting more like competitors. In arguing this summer for a CEO change, Cowen & Co. analyst Helane Becker wrote: “JetBlue is an overly brand-conscious and customer-focused airline, which has resulted in lagging fundamentals.”

………

“What I see Dave Barger doing is leading the company through difficult times and not going into bankruptcy,” says George Hamlin of Hamlin Transportation Consulting. “If there’s something wrong with that, I am living in a strange world.”
(emphasis mine)

If you are wondering why flying sucks wet farts from dead pigeons, just look at this.

"Activist investors" have decided that JetBlue gives an excessively positive experience to its customers, and this must not be allowed to stand.

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