JetBlue CEO Joanna Geraghty has been at the helm for about nine months, and last week she unveiled the carrier's plan to get back to profitability after years of losses and declining performance.
Geraghty's turnaround plan has three primary workstreams:
- Cut costs to enable JetBlue to continue to serve its traditional value-conscious customers profitably.
- Eliminate unprofitable routes. Said differently: shrink to improve earnings.
- Offer first-class cabin and airport amenities like lay-flat seats and branded airport lounges.
The first two items make complete sense for a low-cost carrier, while the third could make you wonder where Geraghty is going with JetBlue strategically. It seems unlikely that the carrier will be able to compete with the likes of Delta and others on first-class amenities (presumably at market/route competitive pricing). After all, who is going to pay ultra-premium fares to ride on a budget carrier? But, if the strategic objective is to make the business an attractive acquisition target for a full-service carrier, then it makes more sense.
In any event, JetBlue is in a tough spot. It is sub-scale, and the larger full-service competitors have breached the ultra-low-cost carrier's proverbial moat with no-frills, basic economy fares. In that context, Geraghty's initiatives make even more sense, because to stick doggedly to the company's previous strategy was to go the same route as fellow ULCC Spirit Airlines, which filed for bankruptcy protection in November with a plan of reorganization of questionable viability.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
