Money Losers of 2007: JetBlue’s David Neeleman hits turbulence
Posted by: in Products and ServicesFiled under: Other issues, Products and services, Management, Southwest Airlines (LUV), JetBlue Airways (JBLU), Oil
When JetBlue Airways Corp. (NASDAQ: JBLU) shoved founder David Neeleman out from his CEO position in May, he described it as a “natural evolution of our leadership structure.” Wow, that’s more spin than you see at a dreidel at Hanukkah.
To say that things haven’t gone JetBlue’s way in 2007 may be an understatement. in February, thousands of fliers were left stranded in jam-packed aircraft that never took off because of inclement weather. To Neeleman’s credit, he swiftly owned up to the blunder and enacted a “bill of rights for customers” and apologized until he was blue in the face — no pun intended.
Since his departure, Neeleman tried his hand at blogging, though his “flight log” hasn’t had a new entry since November. Maybe he’s busy counting his money. InsiderScore estimates that he’s sold more than $30 million worth of stock over the past 18 months. That should help heal his wounded pride. Too bad that investors aren’t so lucky.
Shares of the Forrest Hills, NY-based company have slumped more than 51% amid concerns about high oil prices and shaky consumer confidence. Though JetBlue does have its admirers, many of whom responded to my previous posts on the company, the company’s future as a stand-alone company remains in doubt. It is a small fish in a big pond, which is getting more treacherous by the day amid competition from Richard Branson’s Virgin America and Southwest Airlines Co. (NYSE: LUV), Neelman’s former employer.
Last week, CEO Dave Barger somehow convinced Lufthansa to buy a 19% stake in JetBlue, a move that left some analysts in Germany scratching their heads. “The cash infusion will address JetBlue’s near-term, growing liquidity challenges, but does nothing to address mounting cost and revenue pressures,” William Greene, a New York-based analyst for Morgan Stanley, wrote in a note quoted by Bloomberg News.
Nonetheless, I am rooting for JetBlue to succeed. It made its mark by actually being nice to customers, something that other airlines forgot about years ago.
Be sure to check out other Money Losers of 2007.
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