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Lufthansa Buys Stake in Jetblue, Gains US LCC Partner December 16, 2007

Posted by Andrew in Airbus, Boeing, Jetblue, Lufthansa.
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Germany flag carrier Lufthansa Airlines agreed on Friday to buy a nineteen-percent share in US based low-cost carrier Jetblue Airways. According to the Associated Press,  “the deal provides for an ‘operation cooperation,’ but the companies said no specific areas of integration of flight schedules or systems have been identified.” With the deal, Lufthansa infused $300 million into Jetblue– much needed cash for an airline with $433 billion in current debt. Jetblue Airways was once the darling of Wall Street and the US media, but an operations meltdown on Valentine’s Day 2007  tarnished its reputation and precipitated a fifty-percent loss in its value since April. The deal offers code-sharing opportunities for both carriers, although neither airline discussed the specifics of their future plans. Still, Lufthansa CEO Wolfgang Mayrhuber was bullish on future interline opportunities, saying “this investment presents Lufthansa with a compelling opportunity to invest in the U.S. point-to-point carrier market as the industry continues to evolve.” Lufthansa’s investment in Jetblue comes on the heels of the Open Skies Agreement, a treaty that allows European and American carriers to fly between the continents without restrictions. The agreement does not permit European carriers to fly point to point flights within the United States, however. A Lufthansa-Jetblue alliance provides Lufthansa with a domestic partner with an established New York City hub and sizable domestic network, while Jetblue gains an ally with significant international reach. With the deal, Lufthansa places itself in a good position to take over the US carrier– but only if American legislation preventing a foreign carrier from owning more than twenty-five percent of a US carrier is overturned. Some analysts have speculated that United Airlines, a Lufthansa partner, could purchase the remainder of stock necessary to earn majority ownership, sharing control with its Star Alliance partner.

Sources: Reuters, AP

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Jetblue Amidst Rigorous Review of Business Strategy June 14, 2007

Posted by Andrew in Airbus, Commercial Aviation, Embraer, Jetblue, Southwest.
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Licking its wounds from a customer service melt-down in February and an overall soft market, Jetblue Airways has begun a second review of its long-term business strategy. New Jetblue CEO Dave Barger has already shaved back the carrier’s growth prospects in the short-term, and is considering selling some of the carrier’s Airbus A320 aircraft to generate capital. Last year the airline sold five of its most elderly aircraft to Bluewings, a low-fare carrier based in Dusseldorf, Germany. With Airbus A320 aircraft in high demand at the moment, the sale of these aircraft has proven to be both a financially savy move and a way to reduce capacity. Within the American domestic market, most carriers have reduced their fleet sizes significantly since September 11, 2001. Until recently, Southwest Airlines and Jetblue were notable exceptions; however, even stalwart Southwest is warning that it may have to slow growth amidst a sluggish economy. So far, Barger is satisfied with Jetblue’s cost discipline, but at a recent Merrill Lynch conference, he added that “there is still opportunity for improvement.” All options are being considered to boost revenue, except the implementation of first-class, the CEO recently commented.

Sources: Reuters, Blue Wings