JETBLUE AIRWAYS
Case Study D: JETBLUE AIRWAYS
Names:
ID:
Fatima Al-lbrahim
200800025
Jumana Al-Umran
200800444
Malika Al-Sharif
200801556
Razan Al-Sanea
200801164
College of Business Administration
Instructor: Dr. Emmanuel Okey Ntui
ASSE 4311: LEARNING ASSESSMENT III
Section: 202
JULY 15, 2012
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JETBLUE AIRWAYS
I. Introduction
JetBlue founder, David Neeleman, announced his plans for a new airline in early 1999.
After acquisition of 75 Airbus A320 and allocation of slots at JFK, the airline’s maiden flight
took off in early 2000 destined for Fort Lauderdale in Florida. The company later increased its
routes to Tampa, Orlando, and others. The company recorded good results in the early years of
its operation until 2005 when it acquired a new Brazilian jet. This slowed its progress for the two
consecutive years. During the 2011 final year results, the company announced that it flies for
more than 70 states and 12 countries. Additionally, it announced that it flies to New Mexico,
Puerto Rico, the Caribbean and Latin America (JetBlue, n.d.). JetBlue prides itself for providing
cheap flights that offer in-flight additions, such as television shows. In early 2012, the company
was operating more than 700 flights a day with a fleet of over 120 A320 Airbuses and slightly
more than 50 EMBRAER190 aircrafts (New York Times, 2012).
II. Mission, Vision, and Policies
Founder David Neeleman had the idea that humanity had been forgotten by the available
airlines. From that, he decided to bring humanity back to air travel. JetBlue strives to offer to its
customers the value, style, service and low costs. The company vision is to offer safety at all
times, care for its customers, propel its integrity and guarantee that all customers have
satisfaction with being comfortable, entertained, while paying less for the tickets. As part of its
policy, the company offers only one-way tickets and flies to short destinations. It has a policy of
assigning all seats and having ticketless travels. Moreover, the company has documented
customer-protection bill of rights which details a host of many options as pertains customer
needs and complaints. (JetBlue, n.d.)
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III. Objectives and Strategies
One of JetBlue strategies is offering customers hosts of in-flight entertainment options.
For example, it offers branded popcorns, a JetBlue spa among others. As one of JetBlue
objectives is to focus on short travels and offering the best services and entertainment on board,
JetBlue wanted to do this while offering value for the shareholders. Hence, in the early years
(2000 up to 2005), JetBlue recorded commendable results (JetBlue, n.d.). As part of its strategy,
the company has plans to add 35 aircrafts to its task force every year. This was hatched in 2010
by the board as part of the company’s expansion plans (New York Times, 2012). Another
strategy is offering branded products in the aircraft which includes foodstuff and pleasure
products.
IV. 2007 Situation
In the earliest of 2005, the company had been recording excellent returns of millions of
dollars. On that year, the company obtained new jets that would carry more passengers.
However, the company ignored the operational change that was needed to ensure continued
smooth runs in airports (JetBlue, n.d.). Therefore, the company recorded sharp declines in profits
and this was largely blamed on the CEO and founder David Neeleman because he is the one who
take the decision. JetBlue’s problems spilled over in 2007. In February 2007, the national
weatherman had issued a warning to airlines regarding a possible snowstorm in the western
coast. This was JetBlue’s main operating route and it was a busy season owing to the fact that it
was a favorite Valentine’s destination. Therefore, the company offered a late and inconsequential
warning to customers. The airlines had severely been overbooked leading to large numbers of
stranded passengers at various airports. Furthermore, most of its operations had grinded to a
shameful halt, and the company was forced to make refunds and compensations amounting to
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over $30 Million. Its leadership was also criticized and pilloried in mainstream media (New
York Times, 2012).
Another notable situation that JetBlue grappled with in 2007 was a sudden surge in the
cost of fuel world over. In the previous five years of operations (2002-2007), JetBlue’s business
model had allowed price cuts for its passengers because of the manageable fuel costs. However,
this was bound to change (JetBlue, n.d.). The company had to increase its average travel rates by
over than $10 to remain afloat. This was coupled by tightening spending habits from Americans
because of the beginning of the economic crisis, which was more pronounced in 2008 (New
York Times, 2012).
V. Corporate Governance
A. Board of Directors
Chairman
Vice Chairman
Directors
• Joel Peterson
• Frank Sica
• David Barger (CEO and President),
Peter Boneparth, David Checketts, Virginia
Gambale, Stephan Gemkow, Gen. Stanley
McChrystal, Ann Rhoades, Ellen Jewett, Jens
Bischof
Note. From. "Corporate Governance," by JetBlue, n.d.
The Board of Directors of JetBlue Airways is composed of employee and independent
directors. Most of the Board members are independent directors. The Board of Directors has an
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JETBLUE AIRWAYS
Audit Committee, Compensation Committee, and Corporate Governance and Nominating
Committee. The Board may establish new committees from time to time to direct special projects
for the Board. (JetBlue, n.d.)
The business of JetBlue Airways is directed by the Board of Directors. The Board of
Directors is responsible for setting up general corporate policies, counseling and offering
direction to the management for the long-term interests of the corporation, stockholders, and for
the corporation’s performance in general. However, the Board of Directors is not engaged in the
daily operation details. The Board offers the advice to the corporation through regular reports
and analyses and discussions with the Chief Executive Officer and other officers. (Wikinvest,
2009)
A candidate for election as a director of the JetBlue Board of Directors should have
several characteristics. The Board looks for independent directors with different backgrounds. A
candidate for election as a director has to have experience in positions that required a high degree
of responsibility, be chosen based upon the assistance he/she can provide to the Board, and upon
his/her willingness to dedicate enough time and effort to Board tasks. Before a candidate for a
director is chosen, the Committee will take into consideration the number of other boards he/she
is working for, his/her profession, and whether he/she has a business or not. Candidates for
director elected by shareholders should meet the independence standards of the Nasdaq
Marketplace Rules and approved by the Board. (Bourgoin, n.d.)
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JETBLUE AIRWAYS
B. Top Management
Chief Executive Officer,
President, and Director
• David Barger
Chief Financial Officer
• Mark Powers
Chief Information Officer
• Eash Sundaram
Executive Vice President and
Chief People Officer
• Joanna Geraghty
Executive Vice President and
Chief Commercial Officer
• Robin Hayes
Executive Vice President,
Corporate Affairs, General
Counsel, and Corporate Sec.
• James Hnat
Executive Vice President and
Chief Operating Officer
• Rob Maruster
Note. From. "Corporate Governance," by JetBlue, n.d.
JetBlue top management’s involvement in strategic management is classified as
“Catalyst” due to their direct involvement. They make strategic decisions in an environmentally
sustainable approach. In addition, JetBlue has its own “Jetting to Green” program. The purpose
of this program is to inform the customers and the crewmembers about environmental issues and
to inform the community about their “green” projects, such as compliance with the Airport Noise
and Capacity Act of 1990, projects for curbing greenhouse gas emissions, and social
responsibility programs. (Bourgoin, n.d.)
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JETBLUE AIRWAYS
References
Bourgoin, M. H. (n.d.). Strategic audit: JetBlue Airways. Retrieved July 12, 2012, from
http://www.google.com/url?sa=t&rct=j&q=jetblue+board+responsibilities&source=web&cd
=6&ved=0CGYQFjAF&url=http%3A%2F%2Ferau436gp3.wikispaces.com%2Ffile%2Fvie
w%2FMid_Term_Audit%2B(Mark%2BH.%2BBourgoin).docx&ei=bSjT5aZNZHb4QS21YiRBw&usg=AFQjCNEMuystqHJsXxjEUovnDCuPI84HgA
JetBlue. (n.d.). About us: Customer protection. Retrieved July 12, 2012, from
http://www.jetblue.com/flying-on-jetblue/customer-protection/
JetBlue. (n.d.). Corporate governance. Retrieved July 12, 2012, from
http://investor.jetblue.com/phoenix.zhtml?c=131045&p=irol-governance
JetBlue. (n.d.). Company history. Retrieved July 12, 2012, from
http://www.jetblue.com/about/ourcompany/history.aspx
New York Times. (2012). JetBlue Airways Corporation. Retrieved July 12, 2012, from
http://topics.nytimes.com/top/news/business/companies/jetblue_airways_corporation/index.
html
Wikinvest. (2009). JetBlue Airways: Board of Directors and committees of the Board. Retrieved
July 12, 2012, from
http://www.wikinvest.com/stock/JetBlue_Airways_(JBLU)/Board_Directors_Committees
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