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JetBlue Is Shrinking So Much, It Will Start Paying Pilots Not To Fly

by Staff

JetBlue Is Shrinking So Much, It Will Start Paying Pilots Not To Fly

Just a few months ago, JetBlue had a big plan for growth. Now they’re shrinking quickly. They offered buy out packages to non-union employees to reduce staff count. And now they’re offering to pay pilots not to fly.

This is a huge reversal, thanks to losing two Department of Justice anti-trust suits, losing a CEO, and now entering into strategic retreat.

  • They had a partnership with American Airlines that gave them slots to grow in New York. They didn’t have enough planes and pilots to do that and to build in Boston. They had a plan to get bigger, though, by buying Spirit Airlines.
  • Then they lost the DOJ anti-trust suit against their partnership with American. That eliminated a platform for growth.

    They walked away from appealing that decision to focus on acquiring Spirit (which was odd, since they had fewer opportunities to deploy the planes and pilots they’d be buying). But they lost that suit too. It’s not yet clear whether they’ll walk away from the merger or appeal, though if they do things could drag on for years.

JetBlue has been flying a lot of money losing routes, and let that ride while their big American Airlines and Spirit Airlines strategies played out.

Now that they have a new CEO and President and are under activist pressure from Carl Icahn they are cutting unprofitable flying and looking for more revenue. They even surreptitiously raised checked bag fees on February 1 – posting new fees on their website, not making clear that they were different, and forgetting to tell anyone.

Clearly this is a troubled airline:

  • Shares of the airline are down 21% in a year and 65% in three years.
  • Their on-time performance has been poor.
  • They’ve degraded their inflight product over the years, reducing the differentiation between them and competitors (although still offering a bit more legroom, seat back TVs, and free Wifi).
  • Employees are unhappy.

Now they’re looking for volunteers among their pilots to take the month of April off – to get paid around two-thirds of their compensation not to fly.

JetBlue shares, by the way, are down 2.5% today while United’s, Delta’s and American’s were each up around 3%.

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