NewsMine — economy — united-states — 2003 — 2003-post-war — Viewing Item

Jetblue orders 65 airbus { April 24 2003 } Original Source Link: (May no longer be active)    http://www.washingtonpost.com/wp-dyn/articles/A32774-2003Apr24.html http://www.washingtonpost.com/wp-dyn/articles/A32774-2003Apr24.html JetBlue Beats Forecasts, Orders 65 Planes Reuters Thursday, April 24, 2003; 1:50 PM By Julie MacIntosh NEW YORK (Reuters) - Low-cost airline JetBlue Airways Corp. on Thursday said first-quarter profit jumped 34 percent, and ordered as much as $4 billion of new Airbus aircraft as most of its far-bigger rivals feverishly slash costs to avoid bankruptcy. Three-year-old JetBlue reported a $17.6 million quarterly profit, a rarity in an industry whose stalwarts have already posted $2 billion in losses for the first quarter. The New York-based airline said it ordered 65 A320 aircraft from European planemaker Airbus, with an option for 50 more aircraft. The deal, the biggest commercial aircraft order this year, would be valued according to catalog prices at $3.71 billion to $3.97 billion, excluding the options. JetBlue's move to buy more planes will boost its already-aggressive growth plan, Lehman Brothers analyst Gary Chase said. The order gives JetBlue the ability to triple the size of its Airbus-only fleet within 10 years. "We believe today's release is positive on all fronts," Chase said. "We have been worried about cost execution at JetBlue, but the last two quarters clearly demonstrate that JetBlue is delivering." SWIMMING AGAINST THE CURRENT U.S. airlines are struggling to offset a long-standing revenue slump, caused by the shrunken economy and less corporate spending, by cutting costs across the board. But JetBlue, known for its live inflight television and leather seats, reported a first-quarter profit of 25 cents per share, topping Wall Street estimates. A year earlier it reported a profit of $13 million, or 23 cents per share. Analysts on average had expected JetBlue, which has shown a profit for nine straight quarters, to earn 22 cents per share, according to Thomson First Call. JetBlue's growing customer base is now a thorn in the side of the industry leaders, who are aiming fare sales squarely at customers who fly JetBlue's routes. "The fare environment in the first quarter of this year was much more difficult than it was last year," JetBlue Chief Executive David Neeleman said in a conference call. But JetBlue's revenue still jumped 63 percent to $217.1 million. AMR Corp.'s American Airlines, the No. 1 player in the industry, showed a billion-dollar quarterly loss this week, while Delta Air Lines, Northwest Airlines and Continental Airlines combined for another $1 billion in losses. Southwest Airlines, the model for some aspects of JetBlue's business, reported a $24 million profit, the only other major carrier to buck the loss-making trend. PAYING LESS FOR MORE Hundreds of airplanes now sit in the Western U.S. desert, because slow demand has rendered them useless. But JetBlue, which uses only A320s to save on maintenance costs, has repeatedly said it is "plane-constrained." The industry-wide slowdown has let airlines drive hard bargains for new planes, and Neeleman said JetBlue's strategy was to take advantage of the downturn in pricing. Europe's EasyJet signed a deal for 120 Airbus A319 jets late last year, and Airbus was said to have offered a 40 percent discount. Neeleman would not reveal terms of the new Airbus agreement but said current orders and options could build JetBlue's fleet of A320s into the largest in the world. "You can rest assured that pricing would be commensurate with that position," Neeleman said. "We obviously deserve to have a good price, and Airbus was cooperative." When asked if JetBlue was likely to exercise its options for the 50 extra planes, Chief Financial Officer John Owen said, "In the three-year history of this company, we haven't had an option yet that we haven't exercised." International Aero Engines AG will build engines to power the planes. United Technologies Corp. unit Pratt & Whitney and Britain's Rolls-Royce Plc, both major IAE shareholders, said they could each realize $500 million from the deal, which could be worth up to $1.6 billion for IAE. JetBlue shares were up 69 cents, or 2 percent, at $30.86 in midday Nasdaq trade. (Additional reporting by Jason Neely in London and Noah Barkin in Paris) © 2003 Reuters

Budget cutback healthcare poor { April 28 2003 } Buffett forecasts doom California state budget crisis { April 23 2003 } Dollar edges lower { April 9 2003 } Economy feeling sars effect Fed finds lackluster economy Fed rescue plan print money Fleming bankruptcy pain spreads { April 17 2003 } Gold up after war { April 9 2003 } Greenspan for 5th term { April 23 2003 } Jetblue orders 65 airbus { April 24 2003 } Markets red after war Nation jobless climbs { April 17 2003 } Ny mayor ten thousand more layoffs { April 15 2003 } Oil tops 30 barrel { April 17 2003 } Profit warnings hit war enthusiasm States budget shortfall { April 21 2003 } Treasure could face default { April 29 2003 } Files Listed: 18

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