CASE 28: JETBLUE AIRLINES: GETTING OVER THE "BLUES"?

-clear statement of the companys situation (i.e., the strategic problems it faces)

Interpretation and analysis of the situation, using appropriate theoretical concepts/frameworks

Identification and evaluation of viable options for solving each of the problems you identify

recommendations, consequences for long-term performance

takeaway lessons.

CASE 28 JETBLUE AIRWAYS CORPORATION: GETTING OVER THE "BLUES"? In 2017 JetBlue faced challenges that included rising fuel prices, troubling technical disruptions, and declining quality of the flying experience. Since the beginning of 2016, JetBlue had enjoyed low fuel prices that helped increase their earnings about 18 percent during the second quarter of 2016, but the company experienced technical issues that caused booking problems and resulted in delays, as well as bad publicity In order to cope with the likelihood of anise in future fuel prices, JetBlue undertook m e cost reduction by investing in cabin restyling for instance, adding more seats to JetBlue's A320 sirplanes. However, the shrinking legroom that accompanied the cabin restyling was despised by passengers, which posed a problem for an Barline that had once offered customers a captivating (as opposed to capte experience To meet the challenges, sew CEO Robin Hayes orchestrated out that the company planned to take through 2017. Those i n cluded wider fare options, anord Mint services, cabin restyling new lines of JetBlue credit cards and partnerships with other s The founding CEO of JetBlue, David Neeleman had been used by the board of directors afternoon event when an ice storm severely disrupted the airline's operations. In 2007, Dave Barve, neplovence the inception of JetBlue 1995 became the cod CEO of the company Ultimately Bar was pressured to step down amid constantly depressed stock prices. In February 2015, Robin Hayes took charge of the company as its third chief executive Hayes was the executive vice president of British Airways for the Americas before joining JetBlue in August 2008 Having worked for about 25 years and having ex p erience in the line industry Hayes was considered optimal choice to become the third chief executive of Jet Blue In promoting Robin Hayes to be the airline's new CEO JetBlue board maled its readiness to focus on investor-friendly changes with news of his selection, the share price immediately soared by 5 percent But JetBlue loyalists who loved the company for its customer first policies were getting more and more uncomfortable (see Exhibit 1) Would JetBlueso to clearers or would it into the EXHIBIT 1 JetBlue's Stock Performance versus S&P 500 30.00 JBLU 25.00 Open 20.63 Close 20.82 Low 20.50 High 20.86 Vol 2.86M %Chg 335.56% 20.82 15.00 10.00 2 OM 2'17 Jan 7'13 Jan 6'14 The U.S. Airline Industry The US industry of the those who are of our Sibule Motores while there we wered by producto o Co es recal l oween M the spoke routes in this n certh the Sched th US the operate o ne fond by the Department of Transportation d in a limited ber of with the ted States and abroad and also e Recial chapentem lowe r than dom e s The two one with marines and carry the thepokea b o ty . Use the low-Gare the real the independ roete Dere of the US e t 1973 se is t o the previously protected industry. Swallow.colore pertontered the competitive landscape Sou d 1971 The lowes t there were Thermoflow free -colore and be les who w e re forms of transportation or s w all Lowfare ses have m ed demand in this and bee f in wenin bu from th e Southwest is the t h one se has become a major in h erethe51 bosma 1990 The main base of competition in the airline industry we are prin customer service rot i chedules yes of aircraft record and reputation code sharing relationship fushtet e ndrequ r pro The down in the late 1990s and the terrorist attacks on the World Trade Center and the Pestapon on September 11 2001 werely affected the i n stry and changed the c i tive relationships am The demand for travel dropped sinificantly lead to a redaction traffic and Security Connecy cout, and listy o d Lower feed the increased pity of the low cost fines created a very profile for Since 2011 othersdal hub and species have fled for bankruptcy or under one financial restructur e or Coolidation With these estructures many of them have been able to catly reduce labor cost restructure det and ra a r e competitive cost structure. This has enabled the majorities to prod o t tothove of low.come we still maintain the frequente por and expanne route works The map between low-cost B JetBlue: The Humble Beginnings and the Great Rise utuh Lake Dard Nah setelah bad M ar 19 M osely del i h Al thedry discount in Neelancondered Herb Ke South 's founder andet the South l antino the Heart of the route calho st me and pleadelped the stat e m ents and the Southwest bought the company for 5120 million in 1992 Neoleman became an executive tice president of Southwest However, he could not adult to Southerant's pace of doing things. By 1004 be tion > ANH the two Hitting Bumpy Air Nevertheless, high fuel prices, the competitive pricing and other cont increases made it increasingly difficult to keep JetBlue growing and profitable. The suffered its first ever losses after its IPO in 2005. It posted net losses of $20 million and $1 million for 2005 and 2006, respectively. 14 The se sto on lestine's Day 2007 that cost Near his job w a re he's to the story for more the race Not only did the ere destroy JetBlue's reputation for customer s , but the exposed critical weak in the wys that had the wire 's operations in The reputation hit rock bottom To limit the damage, JetBloemunced huge compensations to customers funds and future which were to cost the airline about 30 million. Nelman quickly followed up with a new Customer Bill of Rights The Customer Bill of Rights outlined imponen tes et major rewards for its the experienced operational problems and could not just to weather-related cancelations within a " a ble amount of time All these concerts and even a public apolory could not restore things to Do Neclean was pushed out a CEO on May 10, 2007 Dave Bare the president a nd the position of chef executive officer Restoring JetBlue's Luster? Under the second CEO, Dave Barger, JetBlue added several new services and embarked on capacity expansion to give the airline a new boort. In July 2007 it became the first U.S. carrier to let passengers and free email and text messages from wireless handheld devices, a technology developed through its LiveTV LLC subdurys in September 2007. it expanded to maller cities that did not have sufficient demand for the large plans flown by Southwest Virgin America, and Skybus Airlines. It also introduced Embr ets to its feet." In 2007, JetBloe had its first full-year profits three yea r s in traffic and operational improvement helped compete for iroking f oute How a result of lobal financial turmod and skyrocketing e prices, Jeo 's profit 2008, and the company reported a net loss of 585 million New s , the company returned to profitability in 2009. Is April 2010 Sette successfully completed the intentional Air Transport Association's (LATAS) Operational Safety Audit (OSA) and achieved IOSA registration eing the highest industry beaches as the world class sie Dale Burger was known for being overly concerned with customers and comfort. During Bar r ette med tributes for its customer service. However, its low fare w that pos April 2014 pile on A P As h wathew racked by weather fight cancion Vel ock Burger desaplard behind b y cares Delta Airlines and fellow discounter Southwest Airlines. The shares were up just percent ince Barger became CEO - In the same period, Southwest there and more than 140 percent and the overall Bloomberg US Airline index gained 49 percent Current Leadership The CEO Rob Harves, led a new price model that included four de ces ( Echabit. Under the new bructure passeren were able to choose which es the don 't want included in the ticketpnice Arthu end of spec i es did not cadea checked bar Pause Whispaid her fares were titled to cucked Bloe Plus le nu at the Bolex and Maleve do boloval points the head of the the Eve Nore og erede Sch e d security and h e space fare rate at wwe to be the first but also by their specific pot the cat. Hayed that the seasoned to deling the best travel expence for customer care isson to inspire Humanity its differentiated model of deserved customer remune The balch e b enefit ed The Beato hold on core and still be het holder p ost w i fe a nd strong and clear powtion and cont des model to support it. Where to my complex le EXHIBIT 2 JetBlue Fare Options BLUE PLUS BLUE FLEX MINT CHECKED BAGS INCLUDED > CARRY-ON (1 BAG + PERSONAL ITEM) INCLUDED BASE TRUEBLUE POINTS (PER DOLLAR) TRUEBLUE ONLINE BOOKING BONUS (PER DOLLAR) $75 (FARES UP TO $99) $100 IFARES UP TO (60-DAYS FROM DEPARTURE FARES $950 CANCELLATIONS OR CHANGES (PLUS ANY FARE DIFFERENCE $75 (FARES UP TO $99) $100 (FARES UP TO $149) $150 FARES $150) $149 $150 (FARES $150) (WITHIN GO DAYS FROM DEPARTURE FARES ANH the two Hitting Bumpy Air Nevertheless, high fuel prices, the competitive pricing and other cont increases made it increasingly difficult to keep JetBlue growing and profitable. The suffered its first ever losses after its IPO in 2005. It posted net losses of $20 million and $1 million for 2005 and 2006, respectively. 14 The se sto on lestine's Day 2007 that cost Near his job w a re he's to the story for more the race Not only did the ere destroy JetBlue's reputation for customer s , but the exposed critical weak in the wys that had the wire 's operations in The reputation hit rock bottom To limit the damage, JetBloemunced huge compensations to customers funds and future which were to cost the airline about 30 million. Nelman quickly followed up with a new Customer Bill of Rights The Customer Bill of Rights outlined imponen tes et major rewards for its the experienced operational problems and could not just to weather-related cancelations within a " a ble amount of time All these concerts and even a public apolory could not restore things to Do Neclean was pushed out a CEO on May 10, 2007 Dave Bare the president a nd the position of chef executive officer Restoring JetBlue's Luster? Under the second CEO, Dave Barger, JetBlue added several new services and embarked on capacity expansion to give the airline a new boort. In July 2007 it became the first U.S. carrier to let passengers and free email and text messages from wireless handheld devices, a technology developed through its LiveTV LLC subdurys in September 2007. it expanded to maller cities that did not have sufficient demand for the large plans flown by Southwest Virgin America, and Skybus Airlines. It also introduced Embr ets to its feet." In 2007, JetBloe had its first full-year profits three yea r s in traffic and operational improvement helped compete for iroking f oute How a result of lobal financial turmod and skyrocketing e prices, Jeo 's profit 2008, and the company reported a net loss of 585 million New s , the company returned to profitability in 2009. Is April 2010 Sette successfully completed the intentional Air Transport Association's (LATAS) Operational Safety Audit (OSA) and achieved IOSA registration eing the highest industry beaches as the world class sie Dale Burger was known for being overly concerned with customers and comfort. During Bar r ette med tributes for its customer service. However, its low fare w that pos April 2014 pile on A P As h wathew racked by weather fight cancion Vel ock Burger desaplard behind b y cares Delta Airlines and fellow discounter Southwest Airlines. The shares were up just percent ince Barger became CEO - In the same period, Southwest there and more than 140 percent and the overall Bloomberg US Airline index gained 49 percent Current Leadership The CEO Rob Harves, led a new price model that included four de ces ( Echabit. Under the new bructure passeren were able to choose which es the don 't want included in the ticketpnice Arthu end of spec i es did not cadea checked bar Pause Whispaid her fares were titled to cucked Bloe Plus le nu at the Bolex and Maleve do boloval points the head of the the Eve Nore og erede Sch e d security and h e space fare rate at wwe to be the first but also by their specific pot the cat. Hayed that the seasoned to deling the best travel expence for customer care isson to inspire Humanity its differentiated model of deserved customer remune The balch e b enefit ed The Beato hold on core and still be het holder p ost w i fe a nd strong and clear powtion and cont des model to support it. Where to my complex le EXHIBIT 2 JetBlue Fare Options BLUE PLUS BLUE FLEX MINT CHECKED BAGS INCLUDED > CARRY-ON (1 BAG + PERSONAL ITEM) INCLUDED BASE TRUEBLUE POINTS (PER DOLLAR) TRUEBLUE ONLINE BOOKING BONUS (PER DOLLAR) $75 (FARES UP TO $99) $100 IFARES UP TO (60-DAYS FROM DEPARTURE FARES $950 CANCELLATIONS OR CHANGES (PLUS ANY FARE DIFFERENCE $75 (FARES UP TO $99) $100 (FARES UP TO $149) $150 FARES $150) $149 $150 (FARES $150) (WITHIN GO DAYS FROM DEPARTURE FARES