JetBlue defers delivery on 31 A320s

[Andy]

Also announced that they'll be doing a $160M convertible. Wanna bet that it'll be death spiral financing? (Wiki it if you don't understand the term).

http://www.forbes.com/reuters/feeds...406036_RTRIDST_0_JETBLUE-AIRBUS-UPDATE-1.html

NEW YORK (Reuters) - Low-fare carrier JetBlue Airways (nasdaq: JBLU - news - people ) Corp said Tuesday it plans to defer delivery of 21 Airbus A320 aircraft for up to five years, citing current high fuel costs.
JetBlue said the aircraft were originally scheduled for delivery between 2009 and 2011 and it plans to defer delivery until 2014 and 2015.
Record oil prices and a weakening U.S. economy have stalled the airline industry's modest recovery from the 2001-2006 downturn.
JetBlue chief executive Dave Barger said Tuesday the deferrals will help JetBlue further moderate its growth rate in 2009 and beyond, which will enhance liquidity and defer future debt obligations.
Last December, JetBlue announced it would sell a 19 percent stake in itself to Deutsche Lufthansa AG (other-otc: DLAKY.PK - news - people ), Germany's national flag-carrier, in a deal worth about $300 million.
"In the face of escalating fuel costs, we believe it is essential to take a more financially conservative approach to managing our business," said Barger Tuesday.
Oil prices, trading around $129 a barrel Tuesday, have roughly doubled in the past year.
Seven small airlines have filed for bankruptcy or stopped operating in the past five months and, if oil prices stay at current levels or go higher, some major airlines also face the prospect of bankruptcy, experts say.
To survive, major airlines have moved to increase fares and fees, cut jobs, cut costs and reduce capacity and services.
Airbus and rival Boeing (nyse: BA - news - people ) keep a close watch on the capacity plans of airlines as they give the clearest indication of air travel demand and, ultimately, the need for new planes.
JetBlue shares fell about 4.5 percent following the closing bell Tuesday after the company announced it was deferring the deliveries and also said it plans to offer $160 million of convertible debentures.

 

[waterski]

Fix title to read 21

 

[PlaneDrvr]

Also announced that they'll be doing a $160M convertible. Wanna bet that it'll be death spiral financing? (Wiki it if you don't understand the term).

http://www.forbes.com/reuters/feeds...406036_RTRIDST_0_JETBLUE-AIRBUS-UPDATE-1.html

NEW YORK (Reuters) - Low-fare carrier JetBlue Airways (nasdaq: JBLU - news - people ) Corp said Tuesday it plans to defer delivery of 21 Airbus A320 aircraft for up to five years, citing current high fuel costs.
JetBlue said the aircraft were originally scheduled for delivery between 2009 and 2011 and it plans to defer delivery until 2014 and 2015.
Record oil prices and a weakening U.S. economy have stalled the airline industry's modest recovery from the 2001-2006 downturn.
JetBlue chief executive Dave Barger said Tuesday the deferrals will help JetBlue further moderate its growth rate in 2009 and beyond, which will enhance liquidity and defer future debt obligations.
Last December, JetBlue announced it would sell a 19 percent stake in itself to Deutsche Lufthansa AG (other-otc: DLAKY.PK - news - people ), Germany's national flag-carrier, in a deal worth about $300 million.
"In the face of escalating fuel costs, we believe it is essential to take a more financially conservative approach to managing our business," said Barger Tuesday.
Oil prices, trading around $129 a barrel Tuesday, have roughly doubled in the past year.
Seven small airlines have filed for bankruptcy or stopped operating in the past five months and, if oil prices stay at current levels or go higher, some major airlines also face the prospect of bankruptcy, experts say.
To survive, major airlines have moved to increase fares and fees, cut jobs, cut costs and reduce capacity and services.
Airbus and rival Boeing (nyse: BA - news - people ) keep a close watch on the capacity plans of airlines as they give the clearest indication of air travel demand and, ultimately, the need for new planes.
JetBlue shares fell about 4.5 percent following the closing bell Tuesday after the company announced it was deferring the deliveries and also said it plans to offer $160 million of convertible debentures.

In the body of the article it says deferring delivery of (21) A320s, and that is what I have read in all the other press reports; yet you state "31" in your posting title?? Typo??

PD

 

[Andy]

DOH! Sorry for the typo; it should read 21. I'd edit the title, but it no longer allows me to edit my original post.

IMHO, it's a good move on JBLU's part. This is a bad time to be taking delivery of additional aircraft. We're at the point in the industry where airlines have to raise fares just to break even. And raising those fares is going to result in less travelers. Less demand for seats.
I also think that the financing's a good call. It doesn't matter if they trash their stock price in order to raise $160M in the current credit environment.

Barger's making the right moves to ensure JBLU's long term survivability.

 

[johnsonrod]

Just curious - what are newhires being told about upgrade times on the Airbus fleet nowadays? Anyone care to estimate?

 

[WateryGrave]

Just curious - what are newhires being told about upgrade times on the Airbus fleet nowadays? Anyone care to estimate?

What newhires???

 

[Dizel8]

What upgrades?

 

[WateryGrave]

What upgrades?

What he said.

 

[PlaneDrvr]

DOH! Sorry for the typo; it should read 21. I'd edit the title, but it no longer allows me to edit my original post.

IMHO, it's a good move on JBLU's part. This is a bad time to be taking delivery of additional aircraft. We're at the point in the industry where airlines have to raise fares just to break even. And raising those fares is going to result in less travelers. Less demand for seats.
I also think that the financing's a good call. It doesn't matter if they trash their stock price in order to raise $160M in the current credit environment.

Barger's making the right moves to ensure JBLU's long term survivability.

Andy, just wanted to give you a hard time for the typo, couldn't resist.

I agree, a very smart move for JB. I have been thinking for the last month or so, just when they were going to make this move. For the last six months or so, every month when they reported their monthly 'travel' figures to the DOT; their ASMs where growing (on year over year figures), about 5-6% more than their RASM. They were basically adding more seats quicker than they were adding pax to fill them, resulting in a gradual decrease in their load factor, like I said for at least the last six months.

As I said, very wise move. And, with the uncertain economic environment coming later this year, could possibly see them sell some older a/c, to further reduce capacity. Those airlines who manage capacity and revenue best, keeps load factors high, and conserves cash (and manages debt), will be in the best shape come a year from now.

Have a few friends over at JB, so glad to see they are thinking forward.

For what its worth.

PD

 

[Bavarian Chef]

JB's next steps?

Reduce productivity, spread out available flying, hopefully keep the same numbers on reserve

Offer unpaid LOAs

Offer paid separations (FAs)

Furlough