Jetblue buys Inflight TV unit, how does AA respond, Hand puppets?

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NEW YORK--(BUSINESS WIRE)--Sept. 27, 2002--JetBlue Airways
(NASDAQ:JBLU) announced today that it has completed the previously
announced acquisition of LiveTV, LLC, an innovative provider of
inflight entertainment services for single-aisle commercial aircraft
and a developer of other wireless technologies.
JetBlue has offered customers LiveTV with up to 24 channels of
DIRECTV® programming free of charge since April 2000.
Under the terms of the purchase agreement, JetBlue has acquired
100% of the ownership interests in LiveTV, LLC for $41 million in cash
and the retirement of $39 million of LiveTV debt. The acquisition is
expected to have no material impact on JetBlue's earnings per share
over the next few years and to be mildly accretive to earnings
thereafter. LiveTV is now a wholly owned subsidiary of JetBlue
Airways, operating as an independent unit that continues to be managed
by existing LiveTV management and marketed under the LiveTV name.
With the completion of this acquisition, we have helped to ensure
the continuity of an asset we know is highly valued by our customers,
said Dave Barger, president and COO of JetBlue. We look forward to
developing new ways to improve the JetBlue experience.
 
If you knew the rest of the story (as Paul Harvey would put it), this isn't as great for JetBlue as bloonies might want it to sound.

LiveTV never posted a profit. They'd run thru all of their cash, and were probably facing a shut down, which would have impaired B6's ability to get equipment for future deliveries. They probably won't post a profit with B6 as their only customer, and other carriers probably won't be looking to prop up a competitor's balance sheet.

They had no choice but to buy LiveTV since they've married the concept so tightly with their reputation, and not being able to offer it in the future would be a marketing nightmare.
 
[BR][BR]The fact that jetBlue has been the only customer for LiveTV thus far is hardly a condemnation of the technology or LiveTV as a business. I will argue that problems suffered by liveTV (i.e., no new customers) is a reflection of how bad the industry is, in terms of investment capital. [BR][BR]Right now none of jetBlue's competitors have two nickels to rub together for investing in the same type of system for their much larger fleets. JetBlue has two strategic advantages: 1. They are profitable and have adequate working capital for such an investment; 2. They are able to implement this technology on a much smaller fleet, without any distruption or quality of service loss (i.e., no aircraft flying without LiveTV installed) to the customers. [BR][BR]JetBlue managers have closely studied the benefit of having LiveTV on its fleet, and how their customers have responded very favorably to it. It is one important aspect to jetBlue's marketing & sales strength. It works on the same principle as the technology being fielded in SUVs & mini-vans all across this country (the only exception is that there is still no live TV broadcast capability) . When you confine people in a small space for a period of time, they have a propensity to become restless and impatient. Give them some visual stimulus, with the ability to choose from a variety of live programming, and you've just made the travel experience much less painful and arduous. [BR][BR]You can boohoo the benefits, but people are still the same whether they're sitting at home, or trying to control their kids on a long road trip. TV entertains, and to some degree pacifies people. Don't you think that such a system would have utility and value in our business, which is rife with passenger complaints about the overall travel experience? [BR][BR]Now I agree that jetBlue stepped in to save the technology and hardware production capabilities, to ensure continuous access to the fielded systems as their fleet grows. But their decision to buy the company does not necessarily make their foray into LiveTV a material failure, or a future competitive stumbling block.[BR][BR]While things will eventually get better for the industry, jetBlue will have a huge headstart over the competition. Other similar technologies waiting on the sidelines to field their systems may not be around to compete, or will do so at a big disadvantage. JetBlue will have a large operating base of experience (for working out the bugs), lower unit & installation costs, and the ability to improve the technology for second/ third generation improvements. JetBlue all by itself will generate enough business for their new subsidiary to keep it running at a satisfactory level until the business climate improves. [BR][BR]If you want to delude yourselves into thinking that AMR is not interested in the technology for competitive or marketing reasons go ahead. But just like other new technologies, if it is embraced by the consumer, others will follow to remain competitively viable over the long-term. I applaud jetBlue for looking for new ways to serve their valued customers and do it in a way that is operationally sustainable and cost effective. [BR][BR]Hey eolesen, your quip about bloonies makes your posts much less credible since it appears you have an axe to grind by using such a derogatory label. You seem to have a lot of good things to comment on this industry when talking about other issues outside of jetBlue. You should lose the trite phrase and speak of counterparts in your chosen profession with more respect and maturity. I think you'll be far better served for it.
 
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On 9/27/2002 1:57:45 PM eolesen wrote:

If you knew the rest of the story (as Paul Harvey would put it), this isn't as great for JetBlue as bloonies might want it to sound.
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It's also not as bad as you naysayers make it out to be.

LiveTV has become an important part of the brand and helps distinguish JetBlue from AMR and other competitors. It's hard to put a value on that, but it's not insignificant. LiveTV is also the name for the high-capacity data network that just happens to be installed on the plane. Satellite TV is only a part of it. So the main question is: will that $80 million invested be recouped in the long run in the form of additional sales? LiveTV is also the backbone for the cabin security system. What would it cost to rip out that system and install a new one in all 31+ aircraft? And how long would that take? In addition, more features of the system are already in development and on the way. What would it cost to abandon development and start from scratch with a new vendor? I don't know the answers. But these folks don't spend that kind of money to avoid marketing problems.
 
Whatever, guys. I never said LiveTV wasn't a good product.

Since it was first offered as a product over three years ago (when profits were riding high I might add), only three carriers have shown any interest in it, two actually installed it, and I still haven't heard if Frontier is going to go forward and actually put it on their aircraft (they reportedly didn't have a signed contract before the deal was announced).

So, the prospects of it being a standalone profit center for Jetblue are questionable right now.
 
I think the fact that B6 has bought it pretty much guarantees that no other airlines will buy into the service. They will find other ways to compete, once the capital situation allows it, if it ever does again.

By the way, how profitable was B6's $19 LGB-OAK flights ?
 
Once again, the innovators are ridiculed. Oh well, it happened to Orville and Wilbur, after all, I told them that contraption would never fly!

Ask GM, Ford and Chrysler what their customers think of adding TV to their cars and minivans, one of the hottest selling accesories in the market, according to an article, I read somewhere about Detroit.

jetBlue is an airline company, delivering a product that people seem to like. Friendly employees, brand new planes, great prices. Alone, this would have been a great thing, but LiveTV just adds a little extra. Next time you are sitting on the tarmac, delayed, try reading that tired old copy of the inflight magazine, consider spending your dollars on some stuff in a catalogue, I see they have a nice hammock for only 1200 dollars, or worse, watch your traytable. Of course, I should mention, that jetBlue has great on time performance.

I do not think jetBlue passengers pick us because of the TV's, but it is a nice gimmick to have. Perhaps a few, are enticed to try us because of it and if that is the case, I think they will return because of the great service.

Some people think there is only one wAAy of doing business and that those that think outside the box must be ridiculed. Not much to do about that. jetBlue will keep delivering a great service and entertain you along the way. All in all, not such a bad deal.
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Ask GM, Ford and Chrysler what their customers think of adding TV to their cars and minivans, one of the hottest selling accesories in the market, according to an article, I read somewhere about Detroit.
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Yep. But can buy them at Walmart and Target with a built in VCR or DVD player now for under $300, or you can pay for the dealer to install one for upward of $1000. Your call. I chose Walmart...

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Next time you are sitting on the tarmac, delayed, try reading that tired old copy of the inflight magazine, consider spending your dollars on some stuff in a catalogue, I see they have a nice hammock for only 1200 dollars, or worse, watch your traytable. Of course, I should mention, that jetBlue has great on time performance.
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Your last point first... Nobody knows what Jetblue's performance really is because they're not required to file it with the DOT for public consumption.

Second of all, I'd prefer to see the ending when I watch TV. How many people really get to see the end of that show they're watching on final?...

Given the price of MP3 players and DVD equipped laptops, I think you'll see fewer and fewer people really making choices based on IFE offerings, since they can control their own content, and not rely on what happens to be on (be it live or taped) at the moment...

Me, I just prefer a Tom Clancy novel or two...

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Some people think there is only one wAAy of doing business and that those that think outside the box must be ridiculed.
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How often do you see a Jetblue employee (or fan) who didn't also think the Jetblue way of doing business is the only way, and those who do otherwise must be ridiculed...

At least we have that in common, eh?
 
Our way of doing business is not the only way, that much is for sure. I'm not sure how to respond to so broad a criticism as that.

Rather than pretend that any of us know about how all of this will come out, why don't we just get busy doing our jobs, and quit trying to one-up each other? I like the Live TV product, and so do our customers. I'm sorry that you find it so incredibly useless. Notice that I will not make up some inane word to describe American Airlines employees at any time during this post.
BTW, I think that hand puppets is really an example of thinking outside the box. Could you imagine the response to inflight hand puppet performances?
 
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On 9/29/2002 9:25:28 AM eolesen wrote:

Given the price of MP3 players and DVD equipped laptops, I think you'll see fewer and fewer people really making choices based on IFE offerings, since they can control their own content, and not rely on what happens to be on (be it live or taped) at the moment...

Ch. 9 on UAL has a VERY loyal following!

I'd rather have a more extensive audio offering, like XM. imagine getting constant financial reports or the college/pro game of your choice, without the expense of the TV system


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Never said there were not a few different ways to skin a cat. Midwest Express all biz seating, AA's more room throughout coach, UAL's E plus, SWA great fares, the list goes on and on. I was not the one that started this, but as usual, the nay sayers can say nothing good. Although I am getting more than used to it, it really gets boring.

Unlike some people, I give credit were credit is due. I think AA's MRTC is a better concept than UAL E plus and there are things UAL does better, IMHO.

LiveTV is a jetBlue first. Perhaps you personally would rather read or sleep, that is your choice,all I am saying is, that people seem to like it.

So lighten up already!
 
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