For the first time ever, JetBlue (JBLU) is introducing lounges at New York City’s JFK Airport and Boston’s Logan International Airport as part of the company’s strategy to capture premium customers and gain market share in an increasingly competitive landscape.
“We’re focused on really executing to our strategy and focusing on our inherent strengths to bring us back to profitability,” CEO Joanna Geraghty told Yahoo Finance (video above).
To avoid overcrowding, lounge access will mostly be limited to holders of a new JetBlue premium credit card and the airline’s top customers. Complimentary access will be available to level 4 status members of its TrueBlue Mosaic loyalty program and Transatlantic Mint passengers. (Mint is what JetBlue calls its first-class seats.)
Lounge perks will include free food, drinks, and Wi-Fi. Level 4 TrueBlue Mosaic members and premium credit cardholders can bring a guest in free of charge.
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It’s the latest in a broader effort from Geraghty, who is seven months into the new CEO job, to double down on leisure travel, which could signal a move away from value-driven offerings and toward the more luxury offerings that have driven revenue success for competing airlines.
JetBlue was last profitable in 2019, and while the airline recently lifted its forward guidance on the back of lower fuel prices and increased July bookings, the past year has been filled with challenges.
Activist investor Carl Icahn’s Icahn Enterprises (IEP) acquired two board seats and a 10% stake in the company the same week Geraghty took over the CEO role. As she focuses on cost-cutting, she sees alignment with the activist shareholder.
“JetBlue is undervalued, and we strongly believe that,” Geraghty said. “We’ve got a number of really important strengths — whether it’s the slots, the gates, our network, our people, our product offering — and we want to make sure that we’re getting more value out of that.”
Geraghty also dealt with the now-abandoned $3.8 billion merger with Spirit Airlines, which was blocked in January after regulatory scrutiny, earlier this year.
“Clearly, this administration is far more challenging,” Geraghty said about the regulatory environment.
On Wednesday, Alaska Airlines (ALK) completed its acquisition of Hawaiian Airlines (HA) after the Justice Department opted not to block it. Geraghty said this doesn’t change her focus.
“We need to be profitable,” she added. “We’re not pursuing Spirit again.”
Another part of the airline’s path to profitability involved selling $2.75 billion in debt, which led Moody’s to cut the airline’s rating to junk.
Despite the challenges, JetBlue’s latest earnings surprised to the upside, with $25 million in profit for the second quarter. That was down 82% from the prior year but above the Street’s expectations.
The lounges announced today are expected to launch in 2025, so it will take some time for any profit boost from the initiative to show up in company earnings.
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