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moose135
2007-06-29, 03:34 PM
http://www.newsday.com/business/local/n ... -headlines (http://www.newsday.com/business/local/ny-bzjet0630,0,899077.story?coll=ny-top-headlines)


JetBlue puts in severance plan in case of takeover move
By James Bernstein
[email protected]

June 29, 2007, 1:36 PM EDT
JetBlue Airways Corp., the discount airline that has been struggling to return to profitability, has established a severance plan to protect executives and workers in the event a competitor attempts a hostile takeover, company officials confirmed Friday.

Forest Hills-based JetBlue said its plan, disclosed in a government filing late Thursday, was not made in response to any possible takeover attempts but is basically to make it more difficult for a competitor to buy the airline, one of the country's leading low-cost carriers.

But airline stock analysts said it could be a sign of takeover activity to come.

"JetBlue is the only airline that did not have a change in control plan," Bryan Baldwin, an airline spokesman, said Friday. "We feel our culture and our product have been key to our success. We don't want to grow through a merger."

David Barger, JetBlue's new chief executive officer, circulated a memo to employees Thursday. "You may have heard rumors over the last several months about possible consolidation," the memo said, without further elaboration. But, it added, "Our product and brand are so unique that our strategic growth should be driving organically, not necessarily through acquisition or merger."

Barger became JetBlue's CEO last month, replacing founder David Neeleman, who remains non-executive chairman. The management shakeup followed a loss in the first quarter and embarrassing service disruptions during a snow and ice storm at Kennedy Airport Feb. 14. Barger has announced a 60-day review of JetBlue's operations as the airline seeks to stem losses.

Some analysts speculated, however, that JetBlue or any other company would not go through the process of putting together such a severance plan unless there were some likelihood of a takeover attempt.

Shares of JetBlue rose slightly Friday, trading in the middle of the day at $11.80, up 35 cents or 3 percent from Thursday's close. Investors would be likely to make money if JetBlue were acquired.

In its filing with the Securities and Exchange Commission, JetBlue said its plan "provides severance and welfare benefits to eligible employees who are involuntarily terminated from employment without cause or, in certain circumstances, when they resigned during the two-year period following a change in control."

Top JetBlue executives, including the company's senior vice president, executive vice president or higher rank will be eligible for as much as two years' salary and bonus, along with other benefits, in the event they are fired after a takeover.

Other workers, the filing said, will be eligible for 26 weeks pay. JetBlue did not state in the filing a total dollar figure for the severance plan.

Robert W. Mann Jr., an independent airline analyst and consultant in Port Washington, said "The only reason to put this (plan) up is if there's a chance for a change of control." Mann said neither JetBlue not any other company would want to create "the churn" issuing such a plan creates unless there was a need for it.

Mann said that Delta Air Lines, which competes with JetBlue along heavily-traveled East Coast, might be a likely contender for a merger.

Anthony Black, a Delta spokesman in Atlanta, said the airline does not comment on rumors or speculation.

Ray Neidl, who follows JetBlue for Calyon Securities, an investment banking firm in Manhattan, said Friday there remains much talk in the airline industry about mergers, as carriers look for ways to cut costs and expand revenues and routes.

Neidl said he was skeptical about Delta as a merger partner with JetBlue. Delta recently emerged from Chapter 11 bankruptcy protection, and fended off an attempt to be acquired itself by through a hostile takeover bid by USAirways Group. Delta appears to want to remain independent, as does JetBlue, analysts said.

Yet Neidl said, "There's reasons JetBlue would be attractive (to other airlines) because of its low stock price. I wouldn't really discount anything at this time."

Additionally, in a separate filing Thursday JetBlue said that it has created a new position -- vice chairman -- and has appointed Joel Peterson, 60, a director, to the post.

JetBlue said Peterson has been an investor in the company and a director since the airline's inception in 1999.

NYARTCCFAN
2007-06-29, 03:55 PM
I could see WN taking over. Thoughts ?

lijk604
2007-06-29, 04:01 PM
Never. They are in slow down mode right now.

h2opunk1822
2007-06-29, 04:09 PM
This is all we need right now, after februart 14, Dave Stepping down, then after the 22 hour incident yesterday.. this would just be the icing on the cake.. i really hope that this doesnt happen, but just gotta take it day by day

hiss srq
2007-06-29, 05:29 PM
I could see WN taking over. Thoughts ?

Not a chance in hell. If anything jet blue will have a flag on their tail in no time if anyione went for it in terms of grabbing markets because it would fir well and the fleet expansion that is wanted would be fufilled sooooooooo fast it is not even funny with out getting too technichal on the business side.

PhilDernerJr
2007-06-29, 05:31 PM
Virgin America is the only airline I can think of that would realistically try to take over JetBlue.

mirrodie
2007-06-29, 05:44 PM
And not for nothing, Phil, Branson is the type to consider it.

lijk604
2007-06-29, 05:53 PM
Talk about hitting the nail in the head. What a way for Virgin America to come in and kick everyone in the shorts.

h2opunk1822
2007-06-29, 07:25 PM
i said it once. and ill say it again.. once virgin america comes into JFK.. jetblue better get there act together... b/c Richard is by far alot smarter buisness wise then in my opnion anyone working in jetblue offices

USAF Pilot 07
2007-06-29, 07:27 PM
WN won't tough B6's entire operation with a 10-foot pole...

Realistically, either some upstart airline with lots of $$$, or more likely as has been said Virgin America will launch some sort of initiative to takeover JetBlue.

JetBlue could make a fortune though selling bits and pieces of its operation to different airlines, but realistically that won't happen....

T-Bird76
2007-06-29, 08:05 PM
I could see WN taking over. Thoughts ?

WN would never ever take over B6. For starters 737s......A320s. They'd double their expenses overnight. Phil and I talked about this Virgin America is a likely candidate and I'd bet to see it happen within five years.

hiss srq
2007-06-29, 08:13 PM
I think US would have a good case. It has been talked about, not in company obviously but it has been talked about previously and it would indeed make lots of sense. 190's and 320's with west powerplants. But I could see VA making the move with certainty.

NYARTCCFAN
2007-06-29, 08:38 PM
United maybe and call it United Blue. Dropping the IAD HUB and concentrating on JFK as International link up to domestic destinations

LGA777
2007-06-30, 07:37 AM
Anybody know if the B6 Terminal at JFK will have US Customs and Intl' arrival gates ?

LGA777

skipper
2007-06-30, 08:34 AM
b/c Richard is by far alot smarter buisness wise then in my opnion anyone working in jetblue offices

Branson is a shrewed business operator. Has anyone read "Hard Landing" The one by Thomas Petzinger not the one by Stephen Leatherskip to next title? BA tried to force Virgin out of Heathrow in the early days and Branson got them back.

With that being said, I have worked with Dave Barger as my direct boss for a number of years (at COA) and he is not only extremely intelligent, but charismatic and influential.

He remembers everyone's name. When you pass him in the hallways he would greet you by name. He held parties for the NJ governor. Everyone knew him and enjoyed working with him at COA.

Smartass Flyboy
2007-06-30, 09:42 AM
Anybody know if the B6 Terminal at JFK will have US Customs and Intl' arrival gates ?

LGA777

My quick response was to say no, because generally ICE has certain usage levels needed to justify a FIS, but on the other hand the terminal it replaces had a FIS. Since TWA had a FIS in 5 maybe B6 could get one in the new terminal.

h2opunk1822
2007-06-30, 03:20 PM
the way thats gonna be is termanal 5 is gonna be the gates.. there is only going to be 6 more gates then what we have now.. once t5 is done.. they are gonna plow t6 and thats going to be our customs gates

nwafan20
2007-07-01, 09:26 PM
As soon as I read that, Virgin America popped in my mind. I can't think of any other airline.

Delta won't touch them, too large of an Airbus fleet, as an all-Boeing fleet that would really screw things up

Southwest would be the LAST to touch them.

Virgin is the only one I can think of.

Matt Molnar
2007-07-02, 12:57 PM
There is news today that Branson has received a buyout offer for Virgin Media, the cable-TV arm of his empire, worth an estimated $11 billion. I know this is far-reaching speculation, especially with the U.S.'s foreign ownership rules, but that kind of cash could sure go a long way toward gobbling up an airline.

Alex T
2007-07-02, 01:05 PM
Why is everyone so quick to deny SWA away from mergers?

WN has been quoted a few times in admitting to looking at a merge or a take over of an airline.

WN has also been quoted saying they could find a way to merge a non boeing fleet into theirs.

You also have to remember a few of B6's Key Leaders came from SWA.

WN has bought and merged with two airlines before.

Just something to stir the pot with.... ;)

I am not saying I know anything though... :twisted:

Alex

nwafan20
2007-07-02, 01:21 PM
Why is everyone so quick to deny SWA away from mergers?

WN has been quoted a few times in admitting to looking at a merge or a take over of an airline.

WN has also been quoted saying they could find a way to merge a non boeing fleet into theirs.

You also have to remember a few of B6's Key Leaders came from SWA.

WN has bought and merged with two airlines before.

Just something to stir the pot with.... ;)

I am not saying I know anything though... :twisted:

Alex

I'm sorry, I just don't see how a 500+ B737 (with 100+ on order) airline could integrate a 100+ A320 operator (with 75 on order) when the B737 and the A32X series are direct competitors. The fleet would not work very well in my mind.

Now if WN were to merge with ATA, I could easily see that. They already have a strong bond together.

Alex T
2007-07-02, 01:26 PM
Matt--
My Boy your kinda missing the point, look at the large fleet WN has compared to B6, they could swallow B6 as a whole and get RID OF the airbus fleet. and Still be able to handle it, the 100+ order could replace the A320 fleet and they could use the E190 for regional routes....

Not something totally out of reach... *stirs pot again*

Alex

hiss srq
2007-07-02, 01:33 PM
*stirs pot again*

Alex If you think it would happen though you havent been stirring it you have been smokeing it.

Alex T
2007-07-02, 01:39 PM
[quote="Alex T":dc1b1] *stirs pot again*

Alex If you think it would happen though you havent been stirring it you have been smokeing it.[/quote:dc1b1]

I am not saying it is happening, nor am I saying it isn't.

But think of the History WN has done. if WN sees a way to make money in the LONG TERM they will do it.

They may lose a lot of money immediatly but WN can afford to lose money in this state.

WN has bought and merged with a non boeing fleet before, this was Muse Air/Trans Star, a fleet of MD80's, do u see any with WN now?

Nope, WN got rid of them.

Realisitcally a B6 and WN merger may not work, BUT, it is not out of the realm of possibilities, and WN HAS BEEN stated and quoted in agreeing that they could make a non boeing fleet work, and also agreed it has been in the market to look at mergers.

Will it happen, WHO KNOWS?

I don't.

But I am throwing out other facts that could support a WN/B6 merger in what has been done in the History of WN.

Alex

T-Bird76
2007-07-02, 02:01 PM
WN didn't merge with Muse air, they bought Muse and it ran as a totally separate division on WN. WN elected to dump everything that was Muse expect for slots, gates, and routes. WN could never dump 100+ A320s it would kill Airbus and totally devalue the price of a new A320. This is exactly what happened to the 717 when AA bought out TWA. AA dumped the 717s airlines that had orders for new 717s canceled the orders, bought the second hand but still new planes and the 717 failed. Not saying the A320 program would collapse but the economic impact to Airbus would be dramatic. Again I don't see WN going after jetBlue, Virgin America yes or even AirTran to some degree. Given jetBlue's poor operational and economic performance the shareholders will be very interested in a white knight to come along and boost the share price.

hiss srq
2007-07-02, 02:06 PM
Now that you put it that way let WN buy B6. I would love nothing more than to see Airbus crippled.

Matt Molnar
2007-07-02, 02:28 PM
I don't see what the big deal is regarding the mixing of fleets. The way I see it, jetBlue and Southwest could operate as completely separate entities while combining and significantly reducing expensive resources such as HR, customer service, cleaning, fuel, etc.

T-Bird76
2007-07-02, 03:18 PM
I don't see what the big deal is regarding the mixing of fleets. The way I see it, jetBlue and Southwest could operate as completely separate entities while combining and significantly reducing expensive resources such as HR, customer service, cleaning, fuel, etc.

The expense is the complete different fleets itself. You're doubling up on MX, training, parts, handling equipment, and staff. Simply combing a few support depts wouldn't save even half the money it would cost to operate such a large and diverse fleet. Look at the trouble U.S is having, both HP and US have virtually the same exact fleet and the issues of combining the two airlines is HUGE!

If you look at the past when Delta bought most of PanAm's assets they dumped the Airbus product within a few short years and only kept what was compatible to their operation.

Matt Molnar
2007-07-02, 05:25 PM
The expense is the complete different fleets itself. You're doubling up on MX, training, parts, handling equipment, and staff. Simply combing a few support depts wouldn't save even half the money it would cost to operate such a large and diverse fleet.

You make it sound as if they'd be adding all these expenses without getting anything back, when of course they'd be gaining a whole bunch of revenue from the new routes they'd be operating. It's not as if jetBlue is losing Delta-esqe sums of cash...$22 million in Q1 2007 (due in large part to the winter ice storm debacle), preceded by Q4 2006 where they turned a profit.

jetBlue would benefit significantly from Southwest's superior operations management. Southwest would benefit significantly from jetBlue's superior marketing and brand. Despite their great business success, Southwest still has a stigma as being a the national carrier of trailer trash. Despite their winter PR problems and dreary ontime performance, jetBlue maintains a phenomenally strong brand based in the city with the most critics per square mile in the world: New York. New Yorkers generally don't talk praisingly about Spirit or U.S. or AirTran or Southwest (most native NYers have never flown WN, but midwestern transplants sure have), they give props to jetBlue. And the hubbub about the stranded passengers at JFK was the result not of people disliking jetBlue, but because people were shocked that such a well-liked business could fail so miserably. Southwest would never be able to build such loyalty on their own.

I'm not saying this will ever happen, and there are plenty of reasons why it might not, but these are a couple of reasons why it would make sense.