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JetBlue Airways

JetBlue: Ways to stay profitable without "nickel and diming" customers

Oct 22, 2009

NEW YORK — JetBlue said Thursday it won't rule out charging for a first checked bag, but it's looking for other ways to stay profitable in weak economic times without "nickel and diming" customers.

The low-cost airline, based in Forest Hills, N.Y., is instead focused on setting up a new reservation system, and said it probably won't make any bold moves to add or expand fees until it fully implements the system early next year.

CEO Dave Barger said the company will "never say never" in regards to adding a fee for a first checked bag. JetBlue currently charges for a second bag, while rival Southwest Airlines doesn't charge for the first two bags.

JetBlue's Barger said in a conference call with analysts that despite tough current economic conditions, the carrier still expects to make a profit in the fourth quarter of this year, as it has in every other quarter of 2009. The company made money in the third quarter thanks to lower costs and cheaper fares that drew more passengers.

In what traditionally has been a strong season for the airlines — the critical summer vacation months — JetBlue Airways Corp. was one of just three airlines in the black, with most large airlines posting losses. Discount carrier AirTran and Alaska posted profits, while Southwest lost $16 million.

Much cheaper fuel helped JetBlue's earnings, and heavily discounted seats got more passengers on board. Barger said the airline's All-You-Can-Jet Pass, which allowed customers to fly as much as they wanted from Sept. 8 to Oct. 8 for $599, was an unexpected success that helped offset weak passenger demand. He called it, "by far the most successful promotion in our company's history."

JetBlue earned $15 million, or 5 cents per share, in the third quarter, compared with a loss of $8 million, or 3 cents per share a year ago.

The total number of paying passengers on JetBlue flights rose 6.3 percent, but it made about 7.7 percent less per passenger than it did a year ago. The fare sales that spurred more traffic hurt revenue, which fell 5.3 percent to $854 million.

The carrier's total costs fell 11 percent to $788 million in the quarter. Most of that was due to drastically lower fuel costs compared with a year ago. It was in the third quarter of 2008 that oil prices hit a record of nearly $150 per barrel, sending prices of jet fuel skyrocketing.

While JetBlue has been expanding its schedule to the Caribbean and plans to add new flights from Boston and San Francisco, the airline said it doesn't plan to take delivery of any new planes until 2011.

Barger said JetBlue is still interested in eventually adding service to Ronald Reagan Washington National Airport, when space is available. It's also considering moving its headquarters to Orlando, Fla. — the site of the company's training facility.

JetBlue: Ways to stay profitable without "nickel and diming" customers
JetBlue CEO Dave Barger / Image via

Source: AP

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