AirTran and JetBlue scale back growth
Low-cost airlines are cutting back on growth in a major way, trimming deliveries of new aircraft as well as limiting routes.
JetBlue and AirTran Airways have been the most aggressive, deferring a total of 21 and 18 aircraft deliveries, respectively. For JetBlue, the deferrals will contribute to negative growth by the fourth quarter, while AirTran's growth will be flat for the fourth quarter and 2009. "This represents a 10% reduction in our capacity plans for the fourth quarter and a 10% reduction in capacity for 2009," says AirTran chief financial officer Arne Haak.
JetBlue is selling six of its Airbus A320s and deferring deliveries from between 2009 and 2011 to between 2014 and 2015. AirTran has sold six Boeing 737-700s and is postponing 737-700 deliveries from 2009-2011 to 2013-2014. AirTran has also issued new shares, raising $135 million and bringing its unrestricted cash to almost $500 million.
JetBlue is also taking other steps including the cancellation of the construction of a new crew hotel and centre in Orlando. It has dropped previous plans to launch services to Los Angeles and may also delay starting a new route to Bogota in Colombia, using traffic rights it has just been awarded by the US Department of Transportation.
But JetBlue has stepped up its Caribbean presence, announcing a build-up in Puerto Rico, where American is pulling down. It is also spending heavily, buying the Airfone unit's assets from telecom giant Verizon for an undisclosed price estimated in the millions. JetBlue will eventually reap revenues from Airfone's cellular towers, which it will use for e-mail services it sells to others.
AirTran for its part is halting a number of routes from Las Vegas, including flights to Bloomington and Moline in Illinois and Akron/Canton and Dayton in Ohio. It will also end service to Rochester in New York and Flint in Michigan later this summer.