Robert Herbst

Jet Blue: Value Buy and Oil Hedge

Mr. Huneycutt,

Respectfully I dispute some of your conclusions from the article above:

"LT Debt"-- Y/E 2008 was ~$2.9 billion as reported in the SEC 10K filing. As a ratio to operating revenue this is not only the highest in the industry (largest 10 airlines) but using this ratio, is nearly twice what any other airline carries. As a percentage of assets, JBLU's LT Debt is at or above the rest of the industry.

"Unrestricted cash" = $571 million. As a ratio to operating revenue, this is about average for the industry and was -propped up- by the infusion of $300 million from Lufthansa which, IMO, was their headway into "Open Skies II".

"CASM" (unit costs) -- Your article states it as 5.94 cents. It is actually 9.87 cents. (source: SEC 10K)

"Industry losses over history" -- While it's true "Net" profits are minimal. Since 1950 and a decade before the first commercial jets, there have been only 2 -relatively- short-term time periods of industry losses;
- 1990-1993 had a net loss of $12.8 billion.
- 2001-2005 had a net loss of $35.1 billion.
- In the last 59 years, 41 had net profits.
- In the last 59 years, 49 had positive operating income.

We (apparently) agree fares need to go up in order to make this very valuable industry stable and as safe as it needs to be.

Robert Herbst
AirlineFinancials.com
(disclosure: Myself and my family hold no equity position in JBLU at this time)