Another Gamble for JetBlue

AirTran has been successful with two very different aircraft, the Boeing 737 seating 137 passengers and the Boeing 717, which seats 117. "The challenge to JetBlue will be to manage two fleet types," said AirTran President Bob Fornaro, in an interview. "I know we can do it, but I don't know whether they can."

JetBlue not only wants to operate two fleet types, it has changed strategies twice to get to that point. Initially, it was committed to flying the A320 between New York and about 40 markets, many of them in the East. Then it shifted, pouring resources into the transcontinental and Florida markets. Now, it's returning to the first set of markets, but with a new type of aircraft.

The reshuffling has contributed to a loss of confidence in JetBlue, which last week reported its second money-losing quarter. Shares of JetBlue have fallen to $9.69 after ending 2005 at $15.38, a 37% decline. The company's credit was recently downgraded by Standard & Poor's. Analyst Jamie Baker of JPMorgan says the airline's flaws include "over-aggressive growth, unrelenting competition, multiple fleet-types, shareholder value destruction and now suspect revenue optimism."

JetBlue introduced its first E190 in November and immediately ran into problems caused by overscheduling, late deliveries, delays in equipping the planes to fly and a crew adjustment period. On a conference call last week, CEO David Neeleman said the problems are over. "We were having challenges on the operating side, but that situation is behind us now," Neeleman said.

Spokesman Bryan Baldwin says the E190 allows JetBlue to add service to small-to-medium-sized markets that are "underserved and overpriced" and to offer more flexibility. In some markets, JetBlue can use A320s or E190s, depending on seasonal demand. In others, such as Boston-West Palm Beach, the E190s are so successful that the company may transition to A320s.