Dim prospects for jetBlue says Bethune

b737gearboy · 04-18-2002, 10:28 PM

Wednesday April 17, 4:05 pm Eastern Time
Reuters Business
Continental CEO sees dim prospects for JetBlue

HOUSTON, April 17 (Reuters) - Continental Airlines (NYSE:CAL - news) Chief Executive Gordon Bethune said on Wednesday he was skeptical that upstart rival JetBlue Airways (NasdaqNM:JBLU - news) would succeed and said its soaring stock price was proving P.T. Barnum correct.
ADVERTISEMENT

Barnum, who founded the Barnum & Bailey Circus, was famous for supposedly saying ``There's a sucker born every minute.''

Bethune made his comments at Continental's annual shareholder meeting in response to a question about his thoughts on JetBlue's stock price rising 70 percent since an initial public offering on Friday. It opened at $27, soared to $45 the same day and has stayed at that level.

``It just says that P.T. Barnum was right,'' the outspoken Bethune said, drawing laughter from the audience.

``Since 1978 the record pretty well shows that no start-up airline...has really been successful, so the odds of JetBlue having long-term success are remote,'' he said.

``I'm not going to say it can't happen because stranger things have happened, but I personally believe P.T. Barnum was, in that respect, correct.''

Officials at two-year-old JetBlue, a discount airline based in New York, were not immediately available for comment.

Continental would love to see similar success in an IPO for its regional airline unit, ExpressJet Holdings Inc. (NYSE:XJT - news), which was in the process of being completed on Wednesday. It was expected to be priced between $14 and $16 per share when it hits the market on Thursday.

``We've had a lot of very, very favorable responses from institutions and retail sales and we expect them to go complete that transaction sometime today,'' Bethune said.

Bethune also said that Continental, still recovering from the effects of the Sept. 11 attacks, hoped to boost its cash reserves from the current level of about $1.1 billion to $1.5 billion by year's end as a cushion against future shocks.

He said the airline, which is the nation's fifth largest, had 55,000 employees when the attacks occurred, but laid off 8,000 afterwards in cost-cutting measures. The lost work force is slowly being brought back, he said.

``Today I'm pleased to report we are back above 48,000 and we continue to rehire our colleagues as demand returns,'' Bethune said.

b737gearboy · 04-18-2002, 10:29 PM

See unlike some I try and be "fair and balanced."

hernan · 04-18-2002, 10:36 PM

Zzzzzzzzzzzzzzzz

Starliner · 04-19-2002, 12:39 AM

If I was Bethune, I'd be keeping a careful look over my shoulder because over time, JetBlue is going to sneak up on CO and wax his ***

TL925 · 04-19-2002, 12:49 AM

Just because he thinks no airline has ever been successful since deregulation, this statement is also hazy considering the successes of both Southwest (most growth being post-78) and America West, doesn't mean that it will never happen. JetBlue has marketed its product well, and its statagy of mass advertising is paying off in the form of profits for the airline. Just because JetBlue is playing a different game than the majors doesn't mean the majors can disregard the airline. Southwest has succeeded in being different, and this iconoclistic form is what JetBlue is emulating. Over time JetBlue will gain more New York market share, and Continental, the self-proclaimed king of New York, will have to take notice. I personally root for the underdogs, and I hope JetBlue succeeds in being the true New York airline.

04-19-2002, 01:22 AM

You make some very valid points but some I have to question. Yes, most of Southwest's growth has occurred since 1978, but to say America West has been successful is a stretch. They've been on the verge of bankruptcy once and it looks like they're going to file sometime in the near future. They are still burning through cash at an alarming rate and the federal loans can only go so far. Personally I think they're gone in the not too distant future.

As for Jet Blue, yes they are trying to model Southwest, but they are not going to be able to do it. Operating out of JFK is not cheap, especially since they have to pay for slots and high landing fees. Southwest operates out of smaller, cheaper airports in order to keep costs in check. Second, Southwest is strictly no frills. How long will Jet Blue be able to afford live TV on their planes? Third, they will not only battle CO for control of NYC but also AA for control of JFK. AA is notorious for fighting to the death and this will be no different. Look how they immediately jumped on JFK-ONT and OAK after Jet Blue announced service. And don't forget that they finally got additional slots in Long Beach to serve JFK and ORD. Lastly, Jet Blue is still not paying for all their planes. Airbus apparently gave them the first 18 months ownership free on each plane, so that's a big cost benefit.....for now.

I don't fully agree with Gordo, but history is a tough precedence. Jet Blue is well funded and managed and they just might buck the trend and survive. It will be very tough to do so.......

george · 04-19-2002, 09:30 AM

He (Gordon B.) is Full Of It!
Instead of bad-mouthing the competition, he should be concentrating on improving his product... which is lacking in all areas of 'Customer Service' (no matter what Crapinental's PR firm says!)

04-19-2002, 11:17 AM

Such an intellectual response. Thanks for your contribution.

Wingman · 04-19-2002, 02:58 PM

Though the post-deregulation era has proven to be brutal for start-up carriers, I believe that JetBlue could be a success story.

Continental does offers a good product, but this is not to say that JetBlue will not be targeting CO passengers in EWR just as it is doing to the passengers of AA and DL at JFK.

Needless to say, CO will have a major fight on its hands in the coming months.

So, sit back and enjoy the ride.

flick70 · 04-19-2002, 07:24 PM

Quote:

Originally posted by CAL 757-300
Such an intellectual response. Thanks for your contribution.

I agree, the post wasn't formed very well, but his point is valid. Continental has more than it's fair share of "bad" employees. I personally have flown them several times, and have yet to have a trip where something didn't go wrong at some level. Other airlines have this same problems (aside from Midwest Express), but on most others, I have had the opportunity to take a "great" trip....but never on Continental.

Gordo's statements remind me of a Dilbert cartoon of a staff meeting. First thing on the agenda...it is going to be a great year...sales are up and so forth. Second thing on the agenda, it is going to be a rough year, so we all have to work harder. The Boss looks over at the secretary and tells her she was supposed to put in a totally different topic between the items.

Point being...it is easy to badmouth another airline and what types of service they deliver...but it is ironic that in those statements, they do not address their own shortcomings.

My spin on jetBlue is that they have potential. Now two majors (AA and CO) have essentially announced that they are gunning for them. This makes life a bit tougher for jetBlue...but they have the right weapons to fight for a while.

Be an interesting topic to revisit a year or two from now, wouldn't it?

04-18-2002, 10:28 PM	#1
b737gearboy Senior Collector Join Date: Nov 2000 Location: KMHT Age: 40 Posts: 248	Dim prospects for jetBlue says Bethune Wednesday April 17, 4:05 pm Eastern Time Reuters Business Continental CEO sees dim prospects for JetBlue HOUSTON, April 17 (Reuters) - Continental Airlines (NYSE:CAL - news) Chief Executive Gordon Bethune said on Wednesday he was skeptical that upstart rival JetBlue Airways (NasdaqNM:JBLU - news) would succeed and said its soaring stock price was proving P.T. Barnum correct. ADVERTISEMENT Barnum, who founded the Barnum & Bailey Circus, was famous for supposedly saying ``There's a sucker born every minute.'' Bethune made his comments at Continental's annual shareholder meeting in response to a question about his thoughts on JetBlue's stock price rising 70 percent since an initial public offering on Friday. It opened at $27, soared to $45 the same day and has stayed at that level. ``It just says that P.T. Barnum was right,'' the outspoken Bethune said, drawing laughter from the audience. ``Since 1978 the record pretty well shows that no start-up airline...has really been successful, so the odds of JetBlue having long-term success are remote,'' he said. ``I'm not going to say it can't happen because stranger things have happened, but I personally believe P.T. Barnum was, in that respect, correct.'' Officials at two-year-old JetBlue, a discount airline based in New York, were not immediately available for comment. Continental would love to see similar success in an IPO for its regional airline unit, ExpressJet Holdings Inc. (NYSE:XJT - news), which was in the process of being completed on Wednesday. It was expected to be priced between $14 and $16 per share when it hits the market on Thursday. ``We've had a lot of very, very favorable responses from institutions and retail sales and we expect them to go complete that transaction sometime today,'' Bethune said. Bethune also said that Continental, still recovering from the effects of the Sept. 11 attacks, hoped to boost its cash reserves from the current level of about $1.1 billion to $1.5 billion by year's end as a cushion against future shocks. He said the airline, which is the nation's fifth largest, had 55,000 employees when the attacks occurred, but laid off 8,000 afterwards in cost-cutting measures. The lost work force is slowly being brought back, he said. ``Today I'm pleased to report we are back above 48,000 and we continue to rehire our colleagues as demand returns,'' Bethune said. __________________ GO BUCKEYES!!!! NATIONAL CHAMPS!! O----H----I----O

04-18-2002, 10:29 PM	#2
b737gearboy Senior Collector Join Date: Nov 2000 Location: KMHT Age: 40 Posts: 248	See unlike some I try and be "fair and balanced." __________________ GO BUCKEYES!!!! NATIONAL CHAMPS!! O----H----I----O

04-18-2002, 10:36 PM	#3
hernan Senior Collector Join Date: Mar 2001 Location: CAROLINA,PUERTO RICO Age: 42 Posts: 426	Zzzzzzzzzzzzzzzz __________________ FLY SOUTHWEST. THE ONLY WAY TO FLY ! COLLECT STAR JETS. THE BEST MODELS!

Thread Tools
Show Printable Version Email this Page
Rate This Thread
Rate This Thread:

04-19-2002, 12:39 AM	#4
Starliner Senior Collector Join Date: Mar 2000 Location: Norman OK USA Posts: 452	If I was Bethune, I'd be keeping a careful look over my shoulder because over time, JetBlue is going to sneak up on CO and wax his ***

04-19-2002, 12:49 AM	#5
TL925 Master Collector Join Date: Jul 2000 Location: London Age: 26 Posts: 529	Just because he thinks no airline has ever been successful since deregulation, this statement is also hazy considering the successes of both Southwest (most growth being post-78) and America West, doesn't mean that it will never happen. JetBlue has marketed its product well, and its statagy of mass advertising is paying off in the form of profits for the airline. Just because JetBlue is playing a different game than the majors doesn't mean the majors can disregard the airline. Southwest has succeeded in being different, and this iconoclistic form is what JetBlue is emulating. Over time JetBlue will gain more New York market share, and Continental, the self-proclaimed king of New York, will have to take notice. I personally root for the underdogs, and I hope JetBlue succeeds in being the true New York airline.

04-19-2002, 01:22 AM	#6
CAL 757-300 Guest Posts: n/a	You make some very valid points but some I have to question. Yes, most of Southwest's growth has occurred since 1978, but to say America West has been successful is a stretch. They've been on the verge of bankruptcy once and it looks like they're going to file sometime in the near future. They are still burning through cash at an alarming rate and the federal loans can only go so far. Personally I think they're gone in the not too distant future. As for Jet Blue, yes they are trying to model Southwest, but they are not going to be able to do it. Operating out of JFK is not cheap, especially since they have to pay for slots and high landing fees. Southwest operates out of smaller, cheaper airports in order to keep costs in check. Second, Southwest is strictly no frills. How long will Jet Blue be able to afford live TV on their planes? Third, they will not only battle CO for control of NYC but also AA for control of JFK. AA is notorious for fighting to the death and this will be no different. Look how they immediately jumped on JFK-ONT and OAK after Jet Blue announced service. And don't forget that they finally got additional slots in Long Beach to serve JFK and ORD. Lastly, Jet Blue is still not paying for all their planes. Airbus apparently gave them the first 18 months ownership free on each plane, so that's a big cost benefit.....for now. I don't fully agree with Gordo, but history is a tough precedence. Jet Blue is well funded and managed and they just might buck the trend and survive. It will be very tough to do so.......

04-19-2002, 09:30 AM	#7
george Master Collector Join Date: Dec 1999 Location: IAD-DCA-BWI/MIA/PHX Posts: 759	He (Gordon B.) is Full Of It! Instead of bad-mouthing the competition, he should be concentrating on improving his product... which is lacking in all areas of 'Customer Service' (no matter what Crapinental's PR firm says!)

04-19-2002, 11:17 AM	#8
CAL 757-300 Guest Posts: n/a	Such an intellectual response. Thanks for your contribution.

04-19-2002, 02:58 PM	#9
Wingman Registered User Join Date: Aug 2000 Location: Bangor, ME Age: 34 Posts: 429	Though the post-deregulation era has proven to be brutal for start-up carriers, I believe that JetBlue could be a success story. Continental does offers a good product, but this is not to say that JetBlue will not be targeting CO passengers in EWR just as it is doing to the passengers of AA and DL at JFK. Needless to say, CO will have a major fight on its hands in the coming months. So, sit back and enjoy the ride.