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JetBlue's CEO steps down

The company's president will replace its founder.

By Times wires, staff
Published May 11, 2007


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NEW YORK - David Neeleman stepped down as chief executive of JetBlue Airways Corp. on Thursday, giving up operational control of the airline he built from a scrappy low-fare upstart into a perk-heavy carrier with nearly 600 daily flights.

Neeleman is being replaced as CEO by Dave Barger, who has been president, but will stay on as chairman.

The move comes less than three months after two winter storms forced JetBlue to cancel nearly 1, 700 flights. Neeleman acknowledged Thursday that it was time for him to step aside and let the operating experts take over.

"I think the board has been talking about this for a long time, " Neeleman said.

Neeleman had been CEO since 1998. He said he will focus on strategic initiatives.

Louis Miller, executive director of Tampa International Airport and a friend of Neeleman, said the change will play to his strengths.

"He looks at the big picture and gets things going, " said Miller, who knew the JetBlue founder when he ran Morris Air, a start-up airline in Salt Lake City. JetBlue is the largest carrier in the Tampa-New York market, with a 30-percent share.

Neeleman's move still marks a big change for a business whose brand, some analysts say, became intertwined with Neeleman's personality.

"He has embodied the personalized service of that airline, " said Richard Levick, president and CEO of Levick Strategic Communications in Washington.

Neeleman concedes that his entrepreneurial skills didn't translate well to the operational side of his business.

Storms on Valentine's Day and St. Patrick's Day essentially shut JetBlue down, forcing the cancellation of flights and stranding thousands of travelers throughout the Northeast.

To prevent a recurrence, JetBlue drafted a "customer bill of rights, " under which the company now issues vouchers to some customers who experience delays.

The canceled flights and vouchers cost JetBlue $41-million, contributing to the company's first-quarter loss of $22-million, or 12 cents a share.

That was an improvement over the year-ago quarter, but was less than analysts had originally expected.

Last month, JetBlue lowered expectations for the rest of the year.

Neeleman said the change at the top isn't a direct result of JetBlue's storm meltdown. He characterized it as "a natural evolution" of JetBlue's leadership structure.

Neeleman said the change came at the request of the company's board, which wanted to separate the jobs of CEO and chairman.

"It's just really good governance, " Neeleman said.

But one can't ignore the effect the storms had on JetBlue, he said.

Neeleman said JetBlue's hiring of Russell Chew as chief operating officer in the aftermath of the storms may have accelerated the timing of the CEO change. Chew's presence allowed Barger to focus less on day-to-day operations and more on managing the entire company, which in turn freed Neeleman to return to his roots as a corporate strategist.

Barger, 49, will retain his role as president. He joined JetBlue as president and chief operating officer shortly after Neeleman founded the airline in 1998.

Neeleman rejected any suggestion that JetBlue is a permanently damaged company.

"I don't think anyone . . . thinks that we're walking wounded, " he said.

Indeed, on Monday JetBlue said its April traffic grew 11.6 percent on a 12.8 percent expansion in capacity.

Shares of JetBlue rose 49 cents, or nearly 5 percent, to close at $10.89 on the Nasdaq stock market. The stock is off 36 percent since mid January, when it briefly hit a high of $17.02 during the day.

Times staff writer Steve Huettel contributed to this story.

Fast Facts:

Turbulent times at JetBlue
Feb. 14: Hundreds of JetBlue passengers are stuck on the tarmac at New York's John F. Kennedy International Airport during an ice storm. Some passengers were held for 10 hours inside planes with foul air, fouler toilets, little food and less information. JetBlue later apologizes for "unacceptable" delays.
March 16: A late winter storm forces JetBlue to scrap 215 flights, virtually shutting down its hub in New York.
April 24: JetBlue posts a first-quarter loss of $22-million, blaming, in part, canceled flights and vouchers.
May 10: JetBlue founder David Neeleman steps down from day-to-day operations, becoming nonexecutive chairman.

[Last modified May 10, 2007, 23:28:45]


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