JetBlue, LB Airport's Major Comm'l Tenant, Removes Founder David Neeleman As CEO
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(May 10, 2007) -- JetBlue Airways, LB Airport's largest commercial tenant, has removed company founder David Neeleman as Chief Executive Officer (CEO), replacing him with JetBlue President David Barger who'll become CEO while Neeleman will serve as non-executive chairman of the company's board of directors (whose majority removed him).
The announcement comes one day after JetBlue's annual meeting in which stockholders pressed Mr. Neeleman on plans to return the company to profitability. In April 2007, the carrier announced an April 2007 first quarter 07 net loss of $22 million (which it attributed to impacts of midwest and northeast ice storms). The company also announced that it expects a full-year 07 operating margin of 5%-7% with a full year pre-tax margin of 1%-3%...both of which are lower than the company previously estimated.
JetBlue became LB Airport's major commercial tenant after the City Council voted (8-1, Carroll dissenting) in May 2001 to change LB's flight slot rules to enable carriers to hold slots before flying them. LB city officials didn't tell their constituents -- who'd be directly impacted by the action -- of discussions between JetBlue and City Hall before the Council vote.
Within days of the Council action, JetBlue took all then-vacant LB flight slots, instantly maxing them out. The events brought Mr. Neeleman to LB Airport where he was applauded by then-city officials and business interests. LBReport.com reported in salient part at the time:
[May 24, 2001]: ...Following discussions with City Hall out of the public eye, JetBlue took all 27 vacant commercial LB flight slots within days of a May 15 City Council vote (previously detailed by LBReport.com) letting airlines hold slots up to 24 months before flying.
Official word came at a May 23 LB Airport news conference attended by an array of LB officialdom, business and aviation interests.
Those on the dais included Mayor Beverly O'Neill; Councilmembers Bonnie Lowenthal, Jerry Shultz, Frank Colonna, Jackie Kell and Laura Richardson-Batts; JetBlue CEO David Neeleman; City Manager Henry Taboada, LB Area Chamber of Commerce President Mike Murray and LB Airport Area Business Council chairman (and Airport Advisory Commission member) Curt Castagna.
Others spotted in the audience included City Auditor Gary Burroughs, Assistant City Manager Jerry Miller, Planning and Building Chief Eugene Zeller, Public Works Director Ed Shikada and Airport Advisory Commission members Elliot Fried and Kristy Ardizzone and Queen Mary Seaport chief Joe Prevratil.
Although other cities have opposed increased airport operations in their communities, LB officials beamed as JetBlue CEO David Neeleman thanked City Hall for helping his company strike the deal that will fill LB Airport's maximum 41 commercial flight slots with 27 daily flights for his airline (transcript below).
Following the formal news conference, JetBlue's CEO told LBReport.com his firm had been in contact with the Mayor and Councilmembers prior to the Council's May 15 vote which effectively facilitated the airline coming to LB (transcript below).
With a gleaming new JetBlue Airbus as a backdrop, Mr. Neeleman promised a neighborhood and environmentally friendly operation, chided what he called "NIMBY" and no-growth positions, then praised Mayor O'Neill and Councilmember Kell for helping bring JetBlue to LB.
JetBlue CEO David Neeleman: ...[A]s we looked around and we saw where we wanted to go, we met some really interesting people and, you know, from our experience here, Kristy Ardizzone who's over there, convinced us, Kristy give her a big hand [applause], that really that Long Beach is the place to be. And when we showed up here and we looked at all this great tarmac space and we looked up at this great terminal and we looked at the leadership of this city, from the Mayor and the City Council and to the Airport management, we really realized we could do a fabulous service out of here.
And so we decided to make that decision...[W]e knew that we needed some time to do this. We didn't want to come in here and promise you 27 flights tomorrow. And that wouldn't have been good for the city. It wouldn't have been good for the airport. It wouldn't have been good for our company.
And so we needed a little bit of time to be able to do that. And so, with the resolution that was passed by the City Council [on May 15], with their vision, we have now two years to implement these flights, which will allow the airport to build new parking structures, will allow them to expand a little bit of the passenger holding room area, and so it really is a combination of a lot of peoples' efforts that is the reason we're standing here today.
...At this point in time, I would like to introduce you to the first person we met when we got here, your Mayor, Mayor O'Neill, was so supportive from day one. To be able to pull all this together, she's been a great help to us and so I'd like to turn the time over to her...
Mayor Beverly O'Neill: This is a great day for the City for the Long Beach, and for airline travelers. This is the ability from Long Beach to New York, and it makes Long Beach more attractive to thousands and thousands of new passengers from this area...I know it's going to be good for us, because we are now in the mode of attracting new businesses. This is going to be an enhancement and they need access to the cities of the east, and that's a step forward to become in Long Beach one of the major technology centers that we're growing in our city. So I thank you. It's going to help the city, and we're going to help you...
JetBlue CEO Neeleman (2d time)...We have this phenomenon going on in America where, you know, the NIMBY phenomenon, where nobody really wants growth, and it has a lot to do with power plants and everything, and it takes a rare combination of a company that is environmentally friendly and visionary politicians that see that look, there is a different way.
And if people are just against growth for growth's sake, I think that's very detrimental, but you have a Councilwoman that is in this district that obviously has a lot to risk in supporting the new growth at Long Beach Airport. And that's Jackie Kell.
And she was a supporter from day one. She was able to take a look at these noise charts that we've put together...we have lots of noise charts and we want to share those with you. We're going to be in your community. We're going to help you understand that there is a difference between JetBlue and these environmentally quiet and emission safe airplanes, environmentally friendly airplanes, and just any old airplane that could have come in here.
And I know a lot of the City Councilmen that supported us were concerned about that, but they knew these slots could have been taken by 727's...and there's really nothing that could have been done about it, so they were more than [inaudible]...[T]he person who led that charge is in this district of [sic] New York is Jackie Kell and I'd like to thank her for her vision and for her leadership. [applause]
Councilwoman Jackie Kell: When I came to Long Beach into office almost three years ago, I became the elected official the was responsible for managing the Long Beach Airport Marketing "Red Team." The "Red Team" was created by my predecessor, Les Robbins, during his term of office. I had a hard look at the concept of the "Red Team" and decided that our goal needed to be filling the remaining flight allocation slots with a responsible, community oriented airline or airlines, and that the "Red Team" find and attract an airline that would care about our city and our residents. I believe we are here today to celebrate the achievement of that goal and I want to thank the members of the "Red Team" that helped us get here...
Councilwoman Laura Richardson-Batts: ..I want to put on my transportation hat. I had an opportunity to work for Congresswoman Juanita Millender-McDonald, and she has her district director here with us, and she's a member of the Airport Transportation Committee for the federal government.
And I'm very familiar that when we turned on the news last night, I saw people talking about, you know, LAX, and the expansion, and we really have to realize that in the southern region, growth does need to occur and Long Beach, we can really maximize our opportunities by participating in it.
...I want to put on my business hat. When you do a business analysis, and you evaluate having a partner coming on board, there's a few things that you should look at. And I see our City Auditor sitting here so we'll see if he agrees. Number one, you want to make sure that that partner is financially solved, and we have that in JetBlue, and that's an encouraging thing that we should be very excited about. The second thing though that we need is a leader in the industry, and when I think when we take a look at this wonderful aircraft, when they've highlighted the things about the leather seats and quiet and TV satellites and all of that, I believe they clearly understand where this industry is going. And we as Long Beach should be excited about partnering with this type of company.
And then the third thing was that I think is most important and that is I'm going to put on my community hat. I stand here now and I see Joe Prevratil with the Queen Mary, I look at other businesses, I see Steve Chesser with Boeing, and I think that what JetBlue is going to do for us is not only bring jobs here in the Long Beach Airport, which for me representing the sixth district is so important, because jobs is our top two or three priorities that we are desperately in need of in our community.
<>But when you look at the jobs not only at the Airport but I believe the activity, the travelers that will come will also bring more jobs in all of Long Beach, for example in places like the Queen Mary. So we're excited to have you...
...And lastly I want to say, Kristy [Ardizzone], I think has been really the cheerleader for the City of Long Beach. If this was a boat, we have to name it Kristy. She has truly taken it on and has not stopped and has really seen the vision of what Long Beach can be. Thank you so much.
Following the podium portion of the news conference, LBReport.com asked JetBlue CEO Neeleman for further details on what led his company to LB...
LBReport.com: So how did it work? Did you call Long Beach Airport? Can you give us kind of the outline?
Mr. Neeleman: Yeah...WinAir was based in Salt Lake City so a lot of our employees from Salt Lake worked for WinAir, so we contacted 'em and said hey who do we talk to, they hooked us up with Kristy [Ardizzone] and we came and made a visit and things just kind of snowballed from there.
LBReport.com: And after talking to Kristy, where were the points of contact in the city?
Mr. Neeleman: Now obviously the Mayor was leading the charge and then Jackie Kell kind of led the City Council. And then we met with each of the City Councilmembers and explained our story, you know, and said this isn't just any airline and this is quiet and this is really jobs and this is growth and for the most part everybody bought it...
LBReport.com: And then after talking to them [after making contact with the city] there was a discussion about amending the flight slot ordinance which was done and that did the deal?
Mr. Neeleman: Yes.
As a result of the City Council's 2001 action, the FAA commenced an administrative proceeding, which City Hall resolved with cooperation from JetBlue (in relinquishing some of its flight slots). Pursuant to the FAA's direction, the Council also restored the city's flight slot allocation rules to what they were before City Hall sought to attract JetBlue.
In June 2006 as one of the final acts of the former O'Neill administration, the Council voted (5-2, O'Donnell & Gabelich dissenting) to certify an Environmental Impact Report on expanding the terminal's permanent facilities. The EIR is now being challenged in court by the LB Unified School District and separately by the LB PTA.
In late April 2007, the Council voted (5-3, O'Donnell, Reyes Uranga, Gabelich dissenting) to proceed with designing an expansion of LB Airport's permanent terminal area facilities to nearly 90,000 sq. ft.
Mr. Neeleman's removal as company CEO comes at a time when City Hall has yet to decide how to finance the terminal expansion project...with several Councilmembers insisting that it be funded through Airport (carrier-supported) operations, not General Fund (general taxpayer-funded) revenues.
During Q & A at the company's May 9, 2007 annual meeting, a shareholder asked, "With Long Beach being full, have you considered adding another southern California focus city, like San Diego?" Mr. Neeleman replied:
Mr. Neeleman: There was an airport that would have worked perfect in southern California and it was El Toro that was an old military base and it was in a perfect spot but sometimes airports are seen as toxic to communities and there was a very loud and vocal group that was able to stop that and now it's going to a shopping mall. So, people pay a lot for their air fare to move forward and they will because there'll be less competition.
And the same, we deal with the same issues at Long Beach as you mentioned. We only have 28 flights a day and that's all we can fly out of there, and there's a pretty sensitive situation there as well.
As to growth opportunities in southern California, we have some additional capacity we can add out of Burbank, which has been successful for us on more of a short-haul basis. We can also do some more stuff at Ontario, California, which we do very little of today. San Diego is certainly an option but it's somewhat constrained because there's a curfew there that's pretty rigid.
And you know there's always LAX. LAX is certainly something that now that we're in SFO [San Francisco Airport], it's something that we should continue to look at as well...
In making its corporate changes, Mr. Neeleman and other company officials said in a written release:
"This is a natural evolution of our leadership structure as JetBlue continues to grow," Mr. Neeleman said. "As Chairman of the Board of Directors, I will focus on developing JetBlue's long-term vision and strategy, and how we can continue to be a preferred product in a commodity business."
"I am honored to serve JetBlue in this capacity, and I thank David for his leadership," Mr. Barger said. "The strength of JetBlue has always been our crewmembers. We believe that when we take care of our people, and make sure they have the right tools and resources, customers will choose us first every time. I look forward to a very bright future for our crewmembers, our customers and our shareholders."
Mr. Neeleman founded JetBlue as Chief Executive Officer in 1998 and became Chairman of the Board of Directors in 2002. Mr. Barger joined JetBlue in August 1998 as President and Chief Operating Officer.
Reuters: Neeleman's Vision No Longer Enough For JetBlue
Reuters: JetBlue Removes Neeleman As CEO
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