Yahoo Finance JetBlue Chairman: 'Everybody's working on survival' as coronavirus decimates airlines
JetBlue Airways (JBLU), like the other major U.S. airlines, is taking a major hit from the novel coronavirus outbreak. “Right now, we're faced with decisions that I would call bad or worse,” JetBlue Chairman Joel Peterson told Yahoo Finance’s “On The Move” on Tuesday. “Everybody's working on survival and maintaining our covenant with customers.”
The airline has 22,000 employees compared to Southwest’s (LUV) 60,000, Delta’s (DAL) 90,000, United’s (UAL) 100,000, and American’s (AAL) more than 125,000.
JetBlue, in its short 21-year history, had grown to 1,000 flights daily transporting 42 million passengers a year before the COVID-19 crisis almost essentially grounded the entire industry.
As of Tuesday, JetBlue is operating between 10% and 15% of its normal schedule. “Look we’ve hit the bottom,” JetBlue CEO Robin Hayes said in an interview with CNBC. “We’re bumping along the bottom and we don’t really see much yet by way of change to that.”
Hayes sees the slowdown continuing through May and June. “We’re hunkered down right now and we’re sitting it out,” he said.
Protecting passenger health
JetBlue doesn’t know how long it will take before service begins to take off again, Peterson says. He points out the airlines have a new level of safety they must provide passengers and employees in a post-coronavirus world. “We've got to make sure that they're safe from a health standpoint,” he said.
One option, in place now, is keeping the middle seat empty to separate passengers. Passengers can expect more room in the short-term, Peterson says. Further out, he added, the airline may start screening passengers, “check their temperatures, make sure that flight attendants can use masks and gloves, take longer to sanitize planes, make sure that our air filtration systems are state of the art.”
Safeguarding the airline’s finances
JetBlue is also securing its financial health. The airline obtained $1 billion in new credit last month on top of the almost $1 billion it will get from the U.S. Treasury under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Of that sum, $250 million is a low interest loan and $685 million is a direct grant to help cover employee salaries through Sept. 30.
Peterson says although the money will prevent furloughs at JetBlue, “We think it is only a Band-Aid and that we really have to figure out new ways of approaching things.”
JetBlue has until the end of April, as do the other airlines, to apply for additional loans form the Treasury Department. “Well, I don't want to make news for JetBlue here. We're still talking about that as a board, and so I'm not going to make news on that,” Peterson said.
United Airlines plans to apply for an additional $4.5 billion on top of the total $5 billion it’s getting under the CARES act. United says it lost $2.1 billion in the first quarter. United’s CEO Oscar Munoz has also warned employees, “The challenging economic outlook means we have some tough decisions ahead as we plan for our airline, and our overall workforce, to be smaller than it is today, starting as early as Oct.1.”
JetBlue will report earnings May 7. CEO Hayes says there are a lot of different recovery options available. “At the end of the day the airlines are going to be an important part of getting the economy going when the time comes and we want to make sure here at JetBlue we are here to do that,” he said.
JetBlue’s future is tied to restoring trust and accepting new ways of doing business as the airlines did after the 9-11 attacks, according to Peterson. “Making sure that customers feel safe traveling, is really the same drill,” Peterson said. The problem he points out is “we just don't know how long it's going to take to restore that.”
Adam Shapiro is co-anchor of Yahoo Finance’s On the Move.
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