JetBlue is struggling. They’ve turned themselves into a smaller version of a fee-based legacy airline, and given up much of their competitive difference. Now they aren’t making money, and they’re trying to fend off activist investor Carl Icahn.
The airline’s turnaround plan involves shrinking to profitability. They’ve gutted Los Angeles and they’re making cuts to transatlantic flying. They’re dropping numerous routes and cities, and have announced they’re pulling out of 15 cities entirely. They deferred delivery of 44 new planes. And this winter they’re pulling back 27% at Washington’s National airport.
JetBlue pilots are worried about the future of their wages. Earlier this year they were offering to pay pilots not to fly.
Now aviation watchdog JonNYC reports that they will be paying pilots to retire early. He calls them ‘credible rumors’ which I take to say he is confident that this is happening, but that the company has not yet announced it.
..contraction.
— JonNYC (@xJonNYC) August 29, 2024
JetBlue has too many pilots for its flying plans. They intend to be smaller, with fewer planes. The government stopped them from buying Spirit, and eliminated their American Airlines partnership which was allowing them to grow in New York.
Senior pilots are the most expensive (since pay tracks with seniority), so if they don’t need the pilots they can invest in retirements they’ll lower their costs going forward. And paid early outs are a better option for the airline than furloughs.
“And paid early outs are a better option for the airline than furloughs.”
I have never fully understood the economics of this as a blanket statement. Why is paying more money to pilots to not work better than paying pilots less money to not work? Do furloughed workers get partial pay? Is there a retirement plan that moves the retired pilot to a different set of books at a lower rate? Is it about pilot morale? Is it about a potential strike? What?
So, this is the destination for Southwest it appears.
They are following the same path.
JNS…the senior pilots don’t get furloughed, the most junior pilots with the lowest pay get furloughed.
@jns – Furloughs have significant disadvantages, as you cited. Morale is hit and over a longer period of time. Getting a fat bonus to retire a couple of years early makes some people feel *good* whereas in furloughs *everyone* feels *bad*. There’s no upside to furloughs except a modicum of control over who is furloughed (though I suspect the union gets involved in these decisions to ensure fairness). With down morale and (very likely) everyone furloughed on a rotating basis, the cheapest pilots are ones probably most likely to bail; with little experience, they have little to lose jumping from one airline to another and starting at the bottom of the seniority list. That will leave B6 with exclusively their most expensive pilot crew, who are now also down on morale.
There’s just no case for furloughs. The money you would have spent on putting more expensive pilots in the roles that juniors are currently taking can instead be invested in long-term retirement of those high expenses, essentially turning a capital expense into long-term savings and boosted morale.
It seems to me all the job eliminations at Jet Blue are a direct result of the federal government. Very sad as this did not have to happen this way.
@jamesb2147, that makes sense but retiring some senior pilots with a fat bonus may keep those with less time happier, it will also cost the union dues since union dues are on a percentage basis. Also, the people retiring would typically be the biggest union supporters since the union was the vehicle that got them the big wages and favorable work rules. I remember a series of buyouts at my work. The first one was not going to be successful but at the deadline a lot of senior personnel took it up. Some regretted doing that later. There was going to be termination of lesser time workers, not furlough, if not enough people took the deals. A person I sometimes worked with took the first deal after more than 30 years of work and then committed suicide less than a month later, probably due to having his whole life tied to his work. I did not have anywhere near the time to retire with all resources set so I was prepared to stay as long as I could. Fortunately enough people exited so the rest of us were able to stay.
David P,
other airlines are not shrinking. B6 pursued 2 major strategies – the Northeast Alliance and acquiring a lower cost competitor in order to gain its assets – that the government had never allowed.
At the same time, its former mgmt chased strategies like expanding all over the US all the while allowing its market position to be eroded in its core markets.
It is stunning that B6 is not the largest carrier in any of its major markets; DL is larger at JFK and BOS while NK – as frail as it is – is larger at FLL.
B6 is reaping the result of its management’s decisions.
Tim –
While I don’t disagree about B6 management errors, the government created these behemoths which are killing LCC and ULCCs in the form of massive scale.
It’s simply anti-competitive and there is no path forward but M&A.
B6 is headed for an eventual merger or liquidation. It will end up in the arms of American Airlines.
These buyout don’t actually do anything. They’re typically “furlough mitigation” to make it look like the union and company did something before furloughs.
Senior pilots have nice schedules making $400K+/yr. Worth millions in just a few years. They’re not giving that up for what little these buyout typically are. The only people that’ll take these are people that was going to voluntarily retire shortly anyways, and you’re just giving them free money.
Article makes it seem like it’s 100% happening, which is definitely not the case. It’s a shame that anyone with a laptop can write whatever they want these days.
@jamesb2147
No, it’s not ‘everyone furloughed on a rotating basis.’. It’s staff off the bottom of the seniority list – by definition the lowest paid staff in the craft. The union has already gotten involved by defining this furlough mechanism.
larry
you represent the fantasies of a handful of people that can’t accept that AA has also screwed up its NE strategy in part by initiating the Northeast Alliance which was an attempt to save the LGA and JFK slots which AA was underutilizing.
No, B6 will not end up in the arms of AA in whole or in part.
@jamesb2417 – furloughs are strictly by seniority order (or reverse seniority, to be precise).
So they start at the bottom of the seniority list (most junior) and furlough up the list from there.
The union has no say in who gets furloughed.
The company only decides on the number of jobs to cut, and when/if to recall the pilots – also in seniority order
Tim.
No one wants to play with you.
Maybe they should revert to their customer focused strategy that made them successful rather than following the legacy model that has faoled them.
I’m not hear to play.
I am here to bring logic.
AA was the largest carrier at JFK for years and AA’s headquarters were at LGA. AA moved its HDQ to N. Texas w/ opening DFW in the 70s and then the government gave B6 as many slots at JFK as AA had. B6 immediately focused on S. Florida – where AA and DL was strong – and the Caribbean – where AA was strong. AA immediately started retreating from markets while DL fought back – first with Song and then with mainline.
AA and B6 are both less than half the size of DL in NYC but AA is still operates the largest domestic network in ASMs IF you include all the RJs AA has in its operation while DL flies the most mainline domestic ASMs. The same is true in BOS.
AA is what it is in the NE because of mgmt decisions, no different than B6.
The government is not going to fix AA and B6′ business model because of decades of bad mgmt decisions. and they proved that with the decision to kill the NEA for both AA and B6 and with the B6/NK merger.
AA will live with the consequences of its bad decisions just as will be true with B6.
If B6 fails (they will not, they will simply restructure), their slots will be offered to low cost carriers which was the intent of the government by creating B6 in the first place.
and the more B6 waffles, the more DL benefits; DL has gained more at the expense of both AA and B6 than any other airline.
those are simply reality and no one has to play anything to realize that.
here
Every union contract I’ve ever seen has a standard phrase, “Last Hired, First Fired!!”
The issue here is that B6 has only been in business since 2000. Most of the senior class came from other airlines and would be banking on both B6 and prior airlines service. Some will be reluctant to move on due to the lack of years of service to build a nice nest egg. Therefore, the junior members suffer the most in and downsizing.
It all depends on how big a bone B6 throws to the senior class of pilots and how well the pension plan is funded.
I have a feeling even Delta would think Tim is annoying.
nobody likes someone that brings facts to the table but that is what I do on aviation social media.
I call balls and strikes regardless of who is involved.
AA will have to deal w/ its own strategic failures and not count on B6′ failure to bail AA out.
Timmy, stop spreading false information. DL is NOT largest carrier at BOS, B6 is.
In fact there is a pretty big margin between two.