Jetblue May Post 1st Time Loss

[etops1]

JETBLUE MAY POST FIRST-TIME LOSS
After 14 consecutive profitable quarters, JetBlue could post its first loss as a public company sometime this year. CEO David Neeleman said the cost of jet fuel is the reason for the potential loss. The airline may increase fares in order to offset the rising fuel costs. (Source: Richmond Times-Dispatch

 

[etops1]

hmmm, no comment huh?

 

[luv2fly]

I had posed a question on another thread concerning fuel. Does JB have any hedges in place for next year? If they don't, and fuel continues at $60+, it seems likely they will post several losing quarters next year. Maybe at some point this industry will learn how to price its product appropiately.

 

[Dizel8]

hmmm, no comment huh?

[post="303077"][/post]​

Well, there really isn't much to say. I think all the airlines with the exception of SWA will post a loss third and fourth quarter, barring any drastic changes in the cost of oil, down that is.

I know jetblue has some hedges, but I do not think very much and cannot remember at which price.

 

[BoeingBoy]

I know jetblue has some hedges, but I do not think very much and cannot remember at which price.

[post="303087"][/post]​

According to ATA figures, about 22% at $30/bbl for 2005 and none for 2006 (they're not alone for 2006 - only Southwest, Alaska, & Airtran are significantly hedged for next year).

Jim

See page 6 of pdf file

 

[Dizel8]

Thanks BB

 

[insp89]

According to ATA figures, about 22% at $30/bbl for 2005 and none for 2006 (they're not alone for 2006 - only Southwest, Alaska, & Airtran are significantly hedged for next year).

Jim

See page 6 of pdf file

[post="303089"][/post]​

BoeingBoy, Thanks for the Information.

 

[coolflyingfool]

At some point, every airline has declared a loss for a quarter. Big whoops. For some airlines it is more impressive when they post a profit for a quarter. Just my thoughts.........

 

[v1rotate]

For quite some time now JetBlue has said that a loss in the 3rd and possibly 4th quarter was likely. This is not new news.

v1

 

[Bagbelt]

It's allright, you can go 20-30 years without making money.

 

[bluetoad]

I thought Neelman was spouting off that jetBlue would be profitable at $80/bbl. I will look for the article

 

[wings396]

"The airline may increase fares in order to offset the rising fuel costs".



Gee, what a Great idea!!! Raise the fares when your costs go up, it's about time that someone in this industry woke up!!!
For years the Airlines have continued to cut their fares while their costs rose. If someone wants to pay beans to get from point to point, let them take a friggen bus. As much as I hate to admit it, in some cases the bus costs more than flying. That right there should be a signal that something is wrong with this indusrty. When the cost of buying an A/C is up in the Millions along with MTC and fuel costs, you can't be flying passengers from coast to coast for under $100 bucks.

 

[Hopeful]

Let's not gloat about this now.
What we see here is that even if a carrier with low costs like JetBlue is feeling the fuel pinch, then fares have to increase. It is the only sensible thing to do. I am sure Jetblue will raise fares rather than begin raping the employees.

The next big day comes for Southwest in 2006. With the lowest cost of fuel in the industry thanks to heaviest hedging, SWA will see their current hedged price of $27 per bbl go up overnight to $35. Now this is still very cheap compared to what the rest of the industry is paying, but it will still be a major jump in cost for SWA.

 

[Flying Titan]

Wings -
Very true, but as any pricing person will tell you, it is an extremely tricky balance. If it were as simple as "just raise the fares," everyone, including the LCCs would do it...but if you raise the fares five dollars, you lose a few people. Raise the fares 25 dollars you lose a few more. Raise the fares 50 dollars and you lose enough people that you were probably better off not raising them in the first place when you consider total revenue. That's been the crux of the delimma all along.

JetBlue has already raised its fares a bit over the last couple of months (5-10 dollars on many routes) and they're probably in a position to raise them by a similar amount again - but don't look for significant fare increases because the goal is to bring in more total dollars...and to do that, they've got to keep sitting people in front of all of those cute little TVs.

 

[Hopeful]

Wings -
Very true, but as any pricing person will tell you, it is an extremely tricky balance. If it were as simple as "just raise the fares," everyone, including the LCCs would do it...but if you raise the fares five dollars, you lose a few people. Raise the fares 25 dollars you lose a few more. Raise the fares 50 dollars and you lose enough people that you were probably better off not raising them in the first place when you consider total revenue. That's been the crux of the delimma all along.

JetBlue has already raised its fares a bit over the last couple of months (5-10 dollars on many routes) and they're probably in a position to raise them by a similar amount again - but don't look for significant fare increases because the goal is to bring in more total dollars...and to do that, they've got to keep sitting people in front of all of those cute little TVs.

[post="303431"][/post]​

If all carriers raise fares accordingly, I don't think anyone is going to lose passengers. I doubt if people are going to start driving up and down and across country instead of flying. Especially with fuel prices where they are.

You can't have every aspect of the economy raising prices except airlines.