JetBlue Airways chief executive Dave Barger expects the US low-cost carrier will begin co-operating commercially with its new minority shareholder Lufthansa by the end of this year.
Lufthansa last month completed the purchase of a 19% stake in New York-based JetBlue. In announcing Lufthansa’s intent to acquire the stake in December, Lufthansa chief executive Wolfgang Mayrhuber indicated he would not have pursued the deal unless co-operation between the two carriers was likely but said details had not yet been discussed.
JetBlue and Lufthansa have since begun talking about how they may cooperate and details will likely be revealed over the next few months.
“We’ve only just begun the commercial discussions on what that could look like,” Barger said in a video interview with Airline Business. “But I’d be very surprised if we’re not doing things jointly in some manner over the course of 2008.”
Barger adds: “The shear fact this investment closed as quickly as it did speaks to the intent between both companies [to cooperate], whether that is commercial or supply chain or whatever. It’s early right now.”
He reveals JetBlue and Lufthansa have been talking to each other for last few years but it wasn’t until last year that a possible financial investment was discussed.
“Lufthansa certainly approached JetBlue in the late summer early fall timeframe in a very complimentary way regarding our brand,” he says. “It was really something unprecedented for them. We’re really excited about it. What a premier company they are.”
Lufthansa paid about $300 million for the stake but Barger says JetBlue, which has only posted break-even results in recent years, did not need the cash.
“The balance sheet was fine. But with where oil is going you can’t ever have a strong enough balance sheet,” he says. “Did we need the capital infusion? No. Was it a nice strike for the balance sheet? You bet, in uncertain economic times and with what’s happening with the cost of energy.”
Barger says JetBlue is not seeking any additional capital. He points out the company is now sitting on over $1 billion in cash, which is “unprecedented” for a US airline of its size.