JetBlue Looks to Future After Spirit Rejects Offer

All airlines – all businesses, for that matter, from mom-and-pop stores to international corporations – are looking for increased revenue opportunities. The eternal question is always, ‘How do we grow our business?’

For many carriers, the usual routes include bumping up fares or increasing ancillary revenue channels like baggage fees and seat selection. For real growth, it can also mean merging and acquiring another airline; although for most big carriers, that is no longer applicable after already exercising that option in the past.

JetBlue Airways was hoping to do just that when it jumped in last month and made a surprise, last-minute bid to purchase Spirit Airlines after Spirit had already announced a merger with fellow low-budget carrier Frontier Airlines.

Give Spirit credit. The airline did its due diligence and investigated the JetBlue offer before deciding it wasn’t for them.

But that leaves JetBlue in a quandary, and with another eternal question.

What now?

JetBlue has always had growth, of course. It started as this little regional New York City-based airline and has grown into the sixth-largest U.S. carrier, now offering flights to the Caribbean, South America and, as of earlier this year, to London.

An ironic note: the Spirit-Frontier merger will make that combined airline the fifth-largest in the country, and that wasn’t lost on Spirit CEO Ted Christie, who publicly said he “wondered whether blocking our deal with Frontier is, in fact, their goal.”

That’s a bit of a capricious statement when you’re spending billions of dollars in a merger, but, sure, it might have a little truthful component to it. But the larger initiative by JetBlue was to speed its growth, i.e., spend now to reap the profits sooner than later.

According to CNBC, JetBlue’s stock prices are down 43 percent over the last year. Earlier this year, its 62 percent on-time arrival rate was last among U.S.-based airlines. It also got caught short-handed this spring with numerous delays and cancellations resulting from bad weather and short-staffed employees – and, to be fair, so did other airlines – who weren’t able to get into the proper destinations to work flights.

“I think they can fix themselves. They need leadership who is really able to manage a much bigger and much more complex airline,” Mark Ahasic, an aviation consultant who worked at JetBlue from 2000 to 2006, told CNBC. “It’s not the entrepreneurial start-up JetBlue anymore. It’s an evolved carrier.”

So now JetBlue will have to do it the old-fashioned way. Instead of buying its way out of its problems, the airline is going to have to make operational changes. Instead of instant growth, JetBlue will have to be content with incremental growth.

“We can’t control the weather, but we can try and control everything enough, and that’s what we’re laying out to do,” CEO Robin Hayes said on the April earnings call according to CNBC. “But the No. 1 priority from that for me, for the leadership team, for the board right now is restoring our operational performance because that is the path to margin recovery.”