Tuesday, September 30, 2014

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Eyes On Airlines Like JetBlue As Wall Street Turns Attention To Earnings Season

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TWC News: Eyes On Airlines Like JetBlue As Wall Street Turns Attention To Earnings Season
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With gridlock in Washington finally ended, at least for now, Wall Street is now turning its attention to the business at hand: earnings season, where one focus will be the airlines. NY1's Diane King Hall takes a look at JetBlue, which has its headquarters in Long Island City.

Air carriers in North America are expected to rake in nearly $5 billion in profit this year, according to their trade group, the International Air Transport Association, and the next two weeks brings a flood of quarterly report cards from the carriers.

Among them is hometown airliner JetBlue, which gets high marks on some counts.

"JetBlue is actually a great customer-friendly airline to fly," said Jim Corridore, an equity analyst with S&P IQ. "I like their legroom. I like their TVs at every seat."

But Corridore argues that that doesn't necessarily make for a winning strategy. He says that the older JetBlue gets, the more its costs creep up. Most of its staff has spent years with the carrier, which translates into higher pay and more benefits, and that means a difficult tightrope act. Travelers want to pay as little as possible and still get bang for their buck, while the airlines need to make that penny-pinching dollar work for them.

JetBlue recently announced plans to change its one-size-fits-all model, announcing new lie-flat seats on transcontinental flights, which will mean more revenue.

"We weren't pleased with our performance into Kennedy and to San Francisco, as well as Kennedy into LAX, and so we've made this decision because we believe it's in our owners' best interest, our shareholders'," said Dave Barger, CEO of JetBlue.

With this new change from its former egalitarian seating, does it mean that it will now start penny-pinching in other areas like its snack service? JetBlue's CEO says no.

"The JetBlue experience is its being contrarian to the rest of the industry," Barger said. "We've always been about this core experience. That's what people, that's what they're purchasing. Let's not nickel and dime people."

It's something that fliers of the 15-year-old airliner are happy to hear.

"Their service is really good. So I would put it on the same scale as American," said customer Sophie Alexander. "So it was a good experience. I don't have any complaints."

That's something JetBlue is happy to hear.

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