Waterloo v2 ; JB Backs off in LGB

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On 9/23/2002 11:19:05 AM Speedbird wrote:

Go ahead and count your "successes" when you think you've got one to crow about. I appreciate your concern about jetBlue, but you'd be better served by keeping a closer watch on your own kettle of fish at AMR, since they're the ones currently funding your paycheck.
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I have to agree with G4G5 and not Speedbird. AMR's financial performance has nothing to do with their attempts to cage JB. What they are doing is try to lower JB's performance down to AA's level which is a strategy they are pursuing with some effectiveness.

Many people think low cost carriers have their greatest advantage in poor economic times (when the majors are ceding market share and losing money) and their least advantage in good economic times (when the majors are better able to subsidize attacks on such carriers). What AA has found is a fairly cheap way to cost JB a lot of money. If AA is able to tarnish JB's Wall Street reputation and take their stock down to the levels of JB's peers then they will have done massive damage to their ability to fund future expansion.
 
enilria quote:

....then they will have done massive damage to their ability to fund future expansion.

Massive damage? I think that's just a little bit over the top enilria. Save the hyperbole for the Yahoo boards.
 
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On 9/22/2002 10:38:00 AM Farley wrote:

"Perhaps, but can these five vacated slots slots without flying them. I thought not."

Oh, now I understand the problem. Could you post in plain English for those of us who don't have secret decoders? Ouch my genuine black eye is smarting.
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I left out a word...Let's try again shall we...

Can they still use the five slots they are abandoning in the future if they don't fly them for a few months?
 
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Also, the LGB-LAS/OAK flights in question are now deleted from Jet Blue's website if you look at late October departure.
 
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On 9/23/2002 1:19:01 AM G4G5 wrote:
What about the fines for unused slots?
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Fines? Who said anything about fines. If you are referring to my comment about the reservation fees, every airline that has ever reserved a slot for future use at LGB (WinAir, et al) has paid a fee to hold the slot(s), like a deposit in other situations. JetBlue has been paying that fee from the day it reserved slots until it filled the slots with its placeholder flights to OAK, etc. If AA does not begin service with the additional slots it too will have to pay a fee or give back the slots.

The reservation fee exists at LGB as a way for the city to generate revenue from the slots whether they are used or not. It is not a penalty.
 
Actually, Speedbird, JB's VCs decided against another stock offering at this time.

JB was forced to buy LiveTV, though I'm sure they would have preferred to have Harris Corp continue to run it. They have too much invested in LiveTV to see it go under. The $$ spent on that acquisition are $$ they probably would have preferred to spend more directly on operations.

I doubt JB will ever break down it's LGB #s for the last Q. No big deal. JB needed to use or lose their slots. Since they've agreed to give some of them up, at least for the time being, that enables to redeploy them to more lucrative markets and grow their LGB ops as they had originally intended.

JB seems to be handling these bumps in the road just fine.

I agree JB is a superior product to WN. I would rather fly them on the longer routes. WN is probably more attractive on short, high frquency routes, where the additional flights/FF program outweigh comfort considerations. (As you said).

It will be interesting to see how JB/WN eventually compete. Right now it's evident that JB doesn't have the critical mass to take WN on directly. I'll bet that changes in the future. For now, I'd expect JB to avoid WN and compete against the dinosaurs.
 
http://media.corporate-ir.net/media_files/...1prospectus.pdf


Mgt Guru:
From the JB 4/11/02 stock perspective:
LGB granted 27 daily departure slots. JB paid a $10,000 security deposit for each. Here's the fine partWe MUST pay an additional $5000 for each UNUSED slot for each 90 day period after 11/28/01 or those unused slots WILL be forfited Funny how the AA lawyers managed to ask the city of LGB 90 days after 11/28/01 where the money from the fines were. Some one may have the exact data but I believe that on or about 3/1/02 when this was brought up by the AA lawyers, JB had around 20+ unused slots, or the equivallent of a $100,000+ fine(Carty's lawyers paid for themselves that week)

It goes on to read,we MUST use ALL the slots by 6/03 or the unused slots and the deposits WILL be forfited



Speedbird
You may want to look at the perspective as well, especially the risks to JB part.

Why no second stock offering?

Don't try to tell me for a minute that you will be able to do it cheaper the LUV. Nice try.

Why is AA so cheap, the same reason every other airline is so cheap. Could it be the economy, 9/11, a war with Iraq, just to name a few......



A320
If you don't understand how Carty effected all of this then don't bother reading the perspective.
 
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On 9/23/2002 12:27:17 PM jbu320 wrote:

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You may want to take another breath if you smell fish, could be it's you that stinks. I have no beef with B6 on occasion I have even said nice things. I call it the way I see it. Take a look at my post for the B6 expansion. It was positive and posted yesterday before I wrote anything here.

______________________________________________________________________
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You're right, I took another sniff and what I smell is that you're (1)
Smoking some powerful stuff and (2) A definite aroma of sour grapes.

For an uninterested party, you've got some serious research(?) and opinions into a little old startup carrier. You have not only taken today's actions and blown out of proportion; Mate, you're in the wrong business - You should be a prophet with the foresight or imagination you have. Lighten up. You'll never make it to 60.
You do have one thing very right. The story is just in the initial chapters. If you can write the conclusion you are a very astute observer. Hang on. And by the way, Thanks for saying positive things about B6 in earlier posts. We are blessed by your opinion....

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Anytime you make a stupid statement like this one;

WOW. You really lost me on this one. I don't see where the games come in or how Carty has won this round. or one about Jock itch, you really show your ignorance.

You should spend sometime doing some research about your airline before you come after me with statements like the quotes above.
 
I have no doubt all the slots will be in use by 6/03, secondly it should by mentioned, that B6 helped the city of LGB by not putting them through an extended, and to the city of LGB, costly court battle with AA. Sure the city of LGB will remember that and will remember the actions of AA next time they ask for anything. AA did not exactly create any goodwill with the good people of LGB.

No one knows for sure, where the slots at LGB will be utilized, although some educated guesses can be made. Going head to head with SWA is not the intention, not much point in two low cost carriers slugging it out, cannot be any winners, only loosers. Something both seem to realize. As far as jetBlue not being able to be lower than SWA, well CASM/RASM numbers says differently, but see above point.

AA is more than likely loosing money out of LGB on the routes where they compete with jetBlue and holding onto market share while loosing, is about a smart as Metrojet. If the end result is that AA manages to run jetBlue out of business, fine, but if not, it is a really bad idea fiscally. But hey, what's a few more millions down the drain between friends?
 
G4G5:

If you believe that LUV is a more efficient operator than B6, despite what I posted earlier, then you are the one who is mistaken. If you don't belive me, then invest some time in reviewing the 10-K for 2001 (LUV) & the IPO prospectus for B6 and do the math yourself.

If you have a problem figuring out how to do that, then maybe I can share with you my findings. Nevertheless, IT DOESN'T CHANGE THE FACTS: jetBlue is a lower cost, more efficient operator of the very business model that LUV created.

I'll give you credit on some of your points about Carty's effort to slow down the forward progress of B6 out of LGB, but it isn't a material impact IMO.

Meanwhile, AMR is getting its head handed to them when it comes to direct competition against low-fare carriers, like jetBlue.

But it is an unfair comparison since AMR is a big network carrier that serves all markets, and jetBlue only picks and chooses which markets it will fly in (based on a formula which favors a profitable ROI).

I guess that's why folks like Carty will be in Washington,D.C. tomorrow with hat in hand asking for government help (again). IOW, they are admitting that their business models are irrevocably broken, and can only survive with some form of government subsidy and oversight (aka re-regulation). Make sure your guy at the top gets credit for that too.

The macro-level problems that AMR is facing across its entire network, makes anything that jetBlue has to put up with in LGB just small potatos.
 
[BLOCKQUOTE]----------------[BR]On 9/23/2002 4:25:38 PM G4G5 wrote:
[P]Mgt Guru:[BR]From the JB 4/11/02 stock perspective:[BR]LGB granted 27 daily departure slots. JB paid a $10,000 security deposit for each. Here's the fine partWe MUST pay an additional $5000 for each UNUSED slot for each 90 day period after 11/28/01 or those unused slots WILL be forfited Funny how the AA lawyers managed to ask the city of LGB 90 days after 11/28/01 where the money from the fines were. Some one may have the exact data but I believe that on or about 3/1/02 when this was brought up by the AA lawyers, JB had around 20+ unused slots, or the equivallent of a $100,000+ fine(Carty's lawyers paid for themselves that week)[BR][BR]It goes on to read,we MUST use ALL the slots by 6/03 or the unused slots and the deposits WILL be forfited[BR][BR]----------------[/P]
[P]Exactly right I never said otherwise. I'm not disputing the facts but your term. It is not a fine as in a legal penalty for breaking a rule or law. Check your quote, it uses the term deposit. But to use the term fine is inflammatory and inaccurate. Even AA's own letters use the term option to better describe the fee. [/P]
[P]LGB has [STRONG]always[/STRONG] allowed airlines to pay that $5000 fee to control slots. It is like an option to buy in a real estate transaction. The payment is made to prevent control from reaching a competitor and demonstrate interest and intent in completing the transaction (flying the slot). And as in many business transactions, an option payment is forfeited if the transaction is not completed. [/P]
[P]AA's argument has not been about whether or not JB has paid money or can control slots. Instead it is about the fact that the City of Long Beach changed its rules to allow an airline to continue to pay the fee and then not fly for up to 24 months. Prior to May 2001 an airline at LGB could only hold a slot for 6 months without using it. [/P]
[P]The change was made at the urging of airport staff, who stated that airlines were reluctant to start service if the possibility existed that additional slots would not be available after 6 months to continue to grow a LGB station. AA has argued that the change was made without proper notice and was immediately followed by JB's service announcement, indicating a deal was made that prevented other airlines from also requesting additional slots.[/P]
[P]I have never seen anything in the LB Report or the LB Press-Telegram (not being privy to private discussions I rely on media reports, but not unsupported Internet heresay) stating that AA's lawyers questioned the receipt of money from JetBlue around 3/1/02. There is a letter from AA dated 2/22 requesting 4 slots but it does not mention option payments not being received. If you have seen something factual or supported I'd love to see it if you or someone would post a link.[/P]
[P]Slot rule change from 6 to 24 months [A href=http://www.lbreport.com/news/may01/lgbcoun.htm]http://www.lbreport.com/news/may01/lgbcoun.htm[/A][/P]
[P]AA's background paper of it's legal arguments [A href=http://www.lbreport.com/reference/aaposi.htm]http://www.lbreport.com/reference/aaposi.htm[/A][/P]
[P]Archive of LGB dispute coverage from LB Report [A href=http://www.lbreport.com/reference/reflgb.htm]http://www.lbreport.com/reference/reflgb.htm[/A][/P][/BLOCKQUOTE]
 
Mgt guru,

Everything that you said is correct, A320 found the need to get insulting over his lack of knowledge on the issue, I was just stating facts from the perspective. I use the term fine because that is what B6 uses in it's perspective. As far as the AA lawyers asking for the money, it was in an article/link that unfortunatly was lost with the new message board. It infered that from the 11/28 date to the 2/22 is approx 90 days, why didn't the AA lawyers ask for the slots eariler?
 
Speedbird, keep in mind that CASM's can be misleading if one uses them to compare individual route competition.

JB and WN have some significant operating differences that make an isolated CASM comparison less telling.

1) WN's size affords economies of scale that JB can't match. (Fewer HQ types/plane, better vendor leverage, etc.)

2) JB flies longer average stage lengths, greatly reducing the CASM #.

3) JB's ute rate is somewhat misleading in that it flies low-yield, repositioning Red-eyes, reducing the CASM.

You could probably come up with a dozen significant differences as well. My only point is that fleet-wide CASMs don't necessarily mean that JB would be able to effectively compete in a short-haul, high-frequency city-pair. WN turns the planes around more quickly and can generate more revenue flights per aircraft. WN also has far deeper pockets and can price JB out of any market it chooses. For now, anyway.

You're right though, why should JB/WN compete directly? Better revenue lies elsewhere.
 
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On 9/23/2002 3:59:58 PM G4G5 wrote:

Anytime you make a stupid statement like this one;


"WOW. You really lost me on this one. I don't see where the games come in or how Carty has won this round." or one about Jock itch, you really show your ignorance.


You should spend sometime doing some research about your airline before you come after me with statements like the quotes above.


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G4G5 you only quoted part of my comment to you. My comments were directed at your uncanny ability to project and predict your 'fact based' statements regarding the outcome of the West Coast situation. My comments were neither intended as insult or were they based on ignorance as you rebut. You seem to come after B6 with such venom I only questioned your true interest in the matter and your 'as quoted above' unbelievable prophetic abilities. If you're going to quote me, quote it all.
By the way, I am not coming after you - like you, I only call it the way I see it.
Plz. forgive me if you are insulted.
 
On 9/23/2002 8:27:04 PM Speedbird wrote:

If you believe that LUV is a more efficient operator than B6, despite what I posted earlier, then you are the one who is mistaken. If you don't belive me, then invest some time in reviewing the 10-K for 2001 (LUV) & the IPO prospectus for B6 and do the math yourself.

If you have a problem figuring out how to do that, then maybe I can share with you my findings. Nevertheless, IT DOESN'T CHANGE THE FACTS: jetBlue is a lower cost, more efficient operator of the very business model that LUV created.

G4G5
This is where we differ, the idea that you will be able to maintain 13+ hour a day utilization is absurd. The costs of maintenance and all associated labor are going to increase as the airline increases in size. LUV has simulators and 1900+ trained tech's, an established infastructure that allows them to take full advantage of their economies of scale. What does B6 have? Still renting sim time from Pan Am? Where's the big JetBlue sign hanging on a maintenance hanger at JFK or anywhere else? The B6 business plan requires that they operate a low cost airline out of JFK. LUV's plan has always been to operate out the lower cost airports like ISP, HFD and PVD. This is just a few of the reasons why I believe that LUV is a more efficient operator, am I still mistaken? Sure if you take a snap shot of just todays financial numbers on 9/23, JB VS LUV, then you are correct but is that what you want to hang your hat on? Or could I have a point. Your own stock perspective listed plenty more then I did
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I'll give you credit on some of your points about Carty's effort to slow down the forward progress of B6 out of LGB, but it isn't a material impact IMO.

Meanwhile, AMR is getting its head handed to them when it comes to direct competition against low-fare carriers, like jetBlue.

But it is an unfair comparison since AMR is a big network carrier that serves all markets, and jetBlue only picks and chooses which markets it will fly in (based on a formula which favors a profitable ROI).

I guess that's why folks like Carty will be in Washington,D.C. tomorrow with hat in hand asking for government help (again). IOW, they are admitting that their business models are irrevocably broken, and can only survive with some form of government subsidy and oversight (aka re-regulation). Make sure your guy at the top gets credit for that too.

The macro-level problems that AMR is facing across its entire network, makes anything that jetBlue has to put up with in LGB just small potatos.

G4G5
I could not agree with you more.

But I am not so sure about the head handed to them. AA's transcons and FL market are not in the dire straights that you suggest. As far as LGB, only time will tell. My point was and is, Carty altered JB's expansion plan while costing them money(not ot mention getting slots), he succeded in what he set out to do.
 

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