David Neeleman, CEO of low-fare airline JetBlue, expressed mortification that communications breakdowns had stranded passengers for almost a week and vowed to pay penalties in future to customers trapped on planes. JetBlue bet that an East coast ice storm last Wednesday would pass quickly and refrained from cancelling flights right away, as other airlines did. The storm intensified, and JetBlue ended up cancelling 1,000 flights within five days and shutting down service in 11 cities. At one point, nine full JetBlue planes sat on the runway at JFK for up to 10 hours. The company's communication system failed to cope: pilots and flight attendants were not where they were needed, and there was no method in place to contact them. Neeleman says he will enact a "customer bill of rights" that will pay stranded passengers -- a notion echoed by Democratic legislators Barbara Boxer and Michael Thompson, who are introducing bills requiring airlines to provide adequate food and water during delays and permit passengers to leave stranded planes. Neeleman will implement a communications upgrade within a week and will increase the size of the emergency staff. He expects the meltdown to be a "meaningful" factor in the company's Q1 results, though it is too soon to estimate the damage done.
Sources: New York Times, Wall Street Journal, Bloomberg
Commentary: There's a Reason There Is No Airline ETF • Why I'm Bullish On Airline Stocks • Jim Cramer's Mad Money Lightning Round Picks, Feb. 12
Stocks to watch: JetBlue Airways Corp. (NASDAQ:JBLU). Competitors: AMR Corp. (AMR), Southwest Airlines Co. (NYSE:LUV), UAL Corp. (UAUA)
Seeking Alpha's news summaries are combined into a pre-market briefing called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only a few seconds to sign up.