JetBlue Airways: A Cadre of New Managers Takes Control
Hired by David Neeleman, CEO of JetBlue Airways, it is our job to develop a plan to
restore the company’s growth in revenues, as well as, maintain healthy profit margins JetBlue
enjoyed in earlier years. In order to accomplish this, we must first look at an overall picture of
the condition the airline industry was in 2008. In this case analysis, we will also discuss the
airline industry’s driving forces and key success factors, conduct a ratio analysis of JetBlue’s
financial standings as of 2008, and develop a list of recommendations and implementation plans
to help JetBlue reach its goal of increased profits. Throughout this analysis of this case we will
also determine whether the company’s functional strategies were consistent with, and supportive
of, the company’s business level strategy during that time.
U.S. Airline Industry Assessment
During the time this case was written, the economy was in the peak of the financial crisis
that has affected and is still affecting numerous industries across all markets. The airline industry
was hit significantly hard because they deal with two very important factors: travel and gas
During tough economic times, people tend to save their money in case of a rainy day.
This means that traveling is often put on the back burner and people tend to settle on more cost
saving ways of vacationing. A family might decide on a cruise or drive-to vacation in order to
save on airfare. Companies also tend to cut back on business travel. Recent technological
advances allow business to be conducted via email, phone, teleconferencing and even video
conferencing. This cuts down on the need to hop on a plane to close the deal.
Another major factor affecting the airline industry was the increase in gas and oil prices.
An increase in oil prices often means an increase in flight fares. Although airline companies try
to come up with resourceful strategies to cut costs in other areas to avoid raising prices for the
consumer, however, it often results in some sort of increase for the traveler.
In order to cut costs, airlines began thinking creatively on how to conserve energy. “To
save fuel, airlines used one engine instead of two to taxi on runways, installed wing fins to
minimize drag, flew at slower speeds t reduce burn rate, and carried less fuel on long flights to
decrease weight. Other strategies included flying at higher altitudes where the air was thinner
(meaning less resistance and thus less fuel use) ‘tankering’ (filling up with more fuel than needed
at locations where fuel was less expensive), and making planes lighter to conserve fuel
(eliminating seats and storing less water),” (Gamble, 2010).
For some airline companies, cutting costs and raising prices was not enough.