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Monday, December 8, 2014

Strategic CSR - JetBlue

The article in the url below records a rare phenomenon – a CEO willing to stand up to Wall Street analysts (see also: Strategic CSR – Unilever). Why does this CEO, in particular, need to defend himself?
"Several Wall Street analysts have been agitating for JetBlue Airways to replace Chief Executive Officer David Barger when his contract expires in February. He's too passenger-friendly, they say, and impedes measures that could increase the airline's profitability."
His response to the criticism?
"'You want to compare my track record to bankruptcies and layoffs?' asked Barger, referring to the Chapter 11 restructurings of Delta, United, and American and the subsequent mergers that radically reshaped all three. 'Go ahead. I'll take that comparison.'"
Although Barger has already announced the introduction of some fees (checked bags) and fare increases (business class), he has also makes it clear that "I may be alone among CEOs in the industry, but I don't believe we're a commodity [business]" and the fees, when they arrive, will be introduced "in a JetBlue way." Nevertheless, that is insufficient for some analysts:
"The latest nudge for Barger to leave the company came on Aug. 20 when Cowen & Co. analyst Helane Becker upgraded the stock and raised her target price by $5, to $15 per share, partly on the prospect of a CEO change. 'We believe JetBlue could make a management change at the top in order to foster a change in strategy throughout the company,' Becker wrote. 'We believe a management change would lead to a change in philosophy and likely morph the model similar to one of Spirit Airlines, although not as extreme.'"
Barger's retort?
"Barger says his board fully agrees with having the company continue to build its franchise. And in airline years, 15 is just a baby; JetBlue is still building its franchise and adding planes, the CEO says. To the equity analysts, he says: 'It's a free country. You can write what you want.'"
Take care
David Chandler & Bill Werther
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JetBlue CEO Fires Back at Wall Street Analysts
By Justin Bachman
August 26, 2014
Bloomberg Businessweek