More on JetBlue Airways EMB-190 order
Lehman Brothers issued a report today and their analysis suggests that JetBlue will have plenty of growth opportunities for deploying its recently ordered 100-seat EMB-190 aircraft, however, they believe JetBlue’s target is carrier’s other than US Airways, likely due to MidAtlantic Airways, which I believe will be a competitive weapon for the Arlington-based airline. Specifically, airline analyst Gary Chase made the following points:
- JetBlue has taken a bold, non-traditional step with the order of 100-seat Embraer jets. We believe this step represents a solid opportunity.
According to our analysis, competitive overlap with Southwest will not be an issue. There are plenty of smaller market growth opportunities in city pairs that Southwest does not serve.
If our analysis is accurate, the carriers with the most to lose from the RJ deployment are American, Delta, United, and Continental although all network airlines should be affected.
While the growth opportunities are valid, the new fleet type poses a degree of risk to costs and the culture that JetBlue will have to execute against. If history is any guide, confidence is best placed in the company. We maintain our overweight rating and $39 twelve month price target.
Separately, in an interview Airline Financial News (AFN), JetBlue CEO David Neeleman said the new EMB-190 would operate with lower-cost pilots. AFN reported the airline will partially offset the cost of two fleet types by establishing a separate pilot roster for the Embraer airplanes. Under the JetBlue plan, an Embraer captain would fly for considerably less than an A320 captain, although Embraer pilots will get a chance to transfer to the A320 after reaching a given seniority level.
Best regards,
Chip
