Wolfe: Delta’s move into Boston could ultimately prove good news for JetBlue

Delta Air Lines (DAL) last week included Boston in its list of key hubs and markets for the first time, worrying JetBlue (JBLU) investors, but Wolfe Research thinks DAL’s decision could be good news for JBLU, much in the way it ultimately was for Alaska Air (ALK).

Wolfe believes JBLU management seeks a 7% return on investment capital this year, but it does not see it happening under the current strategy; the firm figures DAL's growth into Boston might help to force hard choices, as it did for Alaska Air.

ALK shares fell 26% from peak to trough in May-June 2013 on fears of competitive capacity growth, which led it to take action on fees and resulting in ALK stock gains doubling over the next year.

Previous: Aggressive push by Delta Air Lines disrupts rivals.

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  • Pony01
    , contributor
    Comments (326) | Send Message
    Huh! I'm glad I am not an analyst: This is patently absurd. JetBlue's problem is leadership. Under David Barger there is none. The strategic decisions are predictable and average. What kind of leader needs to be prodded by a competitor to make the tough decisions? Here's some advice: Strategically - Decide if you're a full service airline or an LCC then go all-in on whichever one you decide; pick strategic hubs and defend them, too many hubs are too costly; treat your workers with respect and don't throw public hissy fits; buy used 320s for cash and consider used 319s (they're cheap) to replace all your E190s. Operationally - Densify your 320s, add a class between Mint and coach on all your flights. Tactically - Use previous booking history to overbook your flights, use Mint sparingly but enough to have only Mint service on certain legs (LA for example); bail-out of Mint early if it doesn't work (see Strategic advice); put resources against running a more operationally reliable airline. (Have you checked your on-time performance of your last flight out of LGA?). More then that and you'll have to hire me.
    26 Jun 2014, 01:48 PM Reply Like
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