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JetBlue Soaring: Investor’s Day Meeting Shows Strong Performance, Hints at Bright Future

JetBlue (B6) had their annual investor’s day yesterday and well – the numbers look good and and even better yet, the plans look simply great.

The airline has long been one of the darlings of the airline industry, revolutionizing the American domestic market back in 2000 when they launched – an all Airbus A320 low cost carrier with personal entertainment (back then!), young crew and free (relatively premium) snacks?

Shut the front door. Except they didn’t. Instead they blew it wide open. 100 destinations and 223 aircraft later they are still going strong (a fate Virgin America unfortunately will never meet as they are merged into Alaska Airlines next year).

It’s not as if it’s been pure smooth sailing since then – we’ll never forget the infamous JetBlue-Gate of 2007 when most of their fleet were stuck on taxiways, tarmacs and aprons at JFK for 8 hours on end…with passengers on board. Nearly 1,700 flights had to be cancelled on that fateful February week. That proved to be a costly lesson for the airline to learn as they began to enter the major league and started being a legitimate threat and competitor to the ‘big boys’.

They’ve gone from strength to strength since then and if we were to go by this latest investor call, it seems like it might continue on for the next few years at least.

The Scoop:

There are some major takeaways from the call that should prove interesting in a positive way to all of us, even those devoutly aligned with their alliance and/or home town carrier.

Basically, JetBlue intends to increase their presence in Latin America by a good margin which is always a great thing to see given the demand on these flights. But most significantly – they want to enter the European market. Given their very reasonable cost base and very strong inflight product, they will prove to be a real headache for the existing players in the market.  What’s even more interesting is that the focus cities for this expansion isn’t their flagship hub in New York but rather their hubs in Fort Lauderdale and Boston.

From Boston Logan International Airport JetBlue is looking at:

  • Keflavik (KEF) – no doubt due to Icelandair’s strong showing in the market – JetBlue has more than a comparable product.
  • Dublin (DUB) – Boston to Ireland…’nuff said. Delta and Aer Lingus, the two incumbents on the route, better beware.
  • London Heathrow (LHR) – will likely prove to be the toughest one of the bunch due to the stature of the route and massive competition.
  • Paris Charles DeGaulle (CDG) – nice add! But will also be quite competitive.
  • Toronto Pearson (YYZ) – makes sense.
  • Milwaukee (MKE), St. Louis (STL), Orlando (MCI) and Minneapolis (MSP) – all gaping holes in JetBlue’s network from their Boston hub.

From Fort Lauderdale International Airport:

  • Caracas Simon Bolivar (CCS) – …interesting given the currency and embargo problems. But on the flip side a fortune can be made currently due to all the airline withdrawals from the market – but only if the airline will be able to actually extract their income out of the country…something other actors in the industry haven’t been able to do.
  • Panama City Tocumen (PTY) – they’d be the perfect foil to Copa Airlines.
  • Sao Paolo (GRU) – highest yielding airport in Brazil and on a route from Florida? Yes.
  • Buenos Aires Ministro Pistarini (EZE) – far South America, but high yielding. Ambitious.
  • Santiago De Chile Arturo Benitez (SCL) – see point immediately above, +1. 
  • London Heathrow (LHR) – It’s London and Florida, it’ll work. It’ll also provide some stiff holiday competition for Virgin and British Airways Gatwick package (Disney, cruise and otherwise) operations to the city.
  • Madrid Adolfo Suarez (MAD) – After London, Madrid is the next biggest city with traffic to Florida so this makes sense.

Phew. That’s a lot of flights. And a lot of new choices for passengers!

JetBlue’s A321 fleet will enable the airline to fly further and offer more premium amenities onboard, as they’ve done with Mint.

The Takeaway:

There’s nothing but good news here.

Some other things to come out of the call were that JetBlue Mint (the airline’s premium service between New York and Los Angeles and San Francisco) is doing very well, especially for so early since it’s introduction. It boasts the highest profit margins through the network at 18% and we can see that connecting traffic – which will prove very important for passengers who might want to head over to London from Tulsa or Buenos Aires from Bismarck and for those of us who want to connect through a JetBlue hub despite living in a major metropolitan city – is up to 15%, the highest it’s ever been for the company. Historically that’s a key indicator and a real sign that JetBlue is making the jump to the next step.

Mint isn’t a surprise given how strong that product is and how competitively priced it is in comparison to the stale UA p.s. flights and AA’s Flagship service with such variable service levels. It’s more on par with Delta One…but at about 1/3rd the price.

If JetBlue can replicate that kind of pricing and service levels that have given them such success on premium trans-continental routes on an international level to Europe from the East Coast, then sign me up Roger! It’d be a steal and a coup and the airline will more than likely see success.

The $600 O/W fares in First Class on Mint on a 6 hour flight are hard to compete with when you get a meal catered from Saxon and Baines in NYC, a premium amenity kit, extensive inflight entertainment and most importantly fully closed suites (comparable to AA First). Do the same for Europe and deep South America (Chile, Brazil and Argentina) and you’ve got yourself a a real contender here.

And given that Mint margins have been so high network wide, I don’t doubt JetBlue’s ability to do the same here.

JetBlue’s Mint Business Class product has proven to be a hit on all fronts – it will likely feature on the new international expansion the airline intends to embark upon per their latest statements.

One more last consideration. I’m a Star guy and try to stick to alliance as much as possible on any flight longer than 1 hour…Joey is a SkyTeam elite and will not venture out of alliance unless her pup Marshall is being held at gun point. Because, not just points but qualifying points. But JetBlue has more than decent international appeal given their array of premium partners they codeshare and interline with. I mean, it’s an impressive list for a more or less domestic US airline that isn’t part of any major alliance:

Impressive.

So yes, while we’d still earn miles other things such as qualifying miles for status or segment bonuses might not materialize on JetBlue despite their many partnerships, it might prove to be a reasonable trade off in a given situation if it meant I could cross the Atlantic in an enclosed suite with an excellent soft product at 30-50% less than the equivalent Business Class product on any other competitor.

This investor’s call from JetBlue is huge in what they’ve given away in terms of how they’ve performed and how they intend to move forward. Until recently, it’s only been speculation whether B6 eventually lands in Europe. This call basically says it’s only a matter of when, not if. There is so much more information from the press release and the call transcript as well.

But basically, all is well at JetBlue and that bodes well for me because I am one that loves JetBlue and what they’re doing. It seems like they’re only going to get better! How about you…would you sacrifice some FF benefits (but not all) for a cheap comfy flight over the Atlantic? After all, remember, Norwegian Airlines $69 fares this aint!

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