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JetBlue Challenges Shareholders


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Wall Street analysts have been tearing apart the discount airliner JetBlue in recent weeks over the company’s decision to continue putting the needs of the customers ahead of the desires of their shareholders. The company’s investors have been pressuring the company to squeeze their customer base for more sizable profits and returns for the shareholders. JetBlue has spent time building up its reputation in the industry as a discount airline that is concerned about the customer and the contradiction wanted by shareholders might damage the company’s financial success in the more long term.

Profit Over Customer SatisfactionJetBlue

The shareholders of JetBlue have called into question the management team of the discount airliner who have seemingly been putting the needs and comfort of their passengers ahead of that of their investors. Many investors have expressed the desire for larger returns and profit margins because they feel that the CEO is being “…overly concerned…” with the well being and overall comfort of their customer base, a comfort that is at the expense of the shareholders. JetBlue has been noted as one of the most affordable and customer friendly airliners in an industry that is very competitive. Many of the investors feel that because the industry has changed so drastically in recent years, profits can be seemingly limitless because of the expectations of cost and comfort that have changed due to the global recession. It has become a norm for many frequent fliers that comfort be pushed to the wayside in exchange for more economical means of transportation. Once upon a time it may have been free for an airline to provide certain services, ones that are now no longer the case. JetBlue’s investors believe that if the company’s management were more focused on following their other competitors then the company would be able to bring in more revenue.

JetBlue has been profitable for the last 17 straight quarters, both industry analysts and investors believe that more profit can be extracted from their current customers. Many Wall Street experts believe that the management team if it were more aggressive would be able to maintain the customer base while extracting the additional revenue where their competitor airlines have done so in the past. Currently JetBlue does not charge its customers to change a flight, check a bag, watch TV, pick their own seat, or even use the internet on board of its aircraft. Investors feel that by charging for these services and comforts would help recuperate some of the losses the company has been experiencing in recent months.

Concerned With The CustomerJetBlue 2

JetBlue gains the bulk of its overall profit, a whopping 80 percent of all its profit from flights coming off of the east coast. In addition to some profit losses the company has also experienced a shortfall in profit when it saw a 13.4 percent jump in labor costs. JetBlue management has seemingly been the eye of comfort for many passengers due to the best in industry leg room of any carrier in operation. JetBlue has set the standard for certain cost free comforts such as having their coach seat pitches set at 33 inches allowing for greater leg room. United, one of the bigger competitors of JetBlue offers customers the availability of coach seat pitched at 34 inches but that comes with an additional charge. Management has indicated that while the shareholders may view some of these perks as wasteful opportunities where the company could be making more money, the company has effectively set itself apart from other airliners.

The company has succeeded so well due to the business model which had been set up to be very customer friendly which if contradicted could spell financial disasters where in the past has been very success by nature. Wall Street which has seemingly only been worried about overall profit might do best to cut the company a little slack. There are already initiatives in place that if gone unhindered would be able to give bigger returns to the shareholders. JetBlue’s leadership believe that by offering certain services for free they have been able to gain customer loyalty and repeat customers based on the quality of their transportation. Many feel that the company is the diamond in the rough because the leadership team cares more for the customer than the bottom line and in essence is adding to their bottom line with more old school practices of customer satisfaction.

It will be interesting to see how JetBlue shakes out in the coming months. Whether or not the shareholders force a leadership change and what the future holds for the continued financial success or the burying of a brand. Current leadership believes that it is because the company offers better customer service at a better price, the company has been able to not fall in line with another faceless discount airline company like so many that currently inundate the industry.

 

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