Will the New JetBlue CEO Hayes Make the Same Mistakes Post Succession?

Dave Barger, longtime CEO of JetBlue will step down in February 2015

Dave Barger, longtime CEO of JetBlue will step down in February 2015

JetBlue Airways Corp. on Thursday named Robin Hayes, its current president and a former British Airways executive, to succeed Dave Barger as CEO, effective February 16, 2015.

Investors had expected the transformation, on the grounds that Barger’s contract was about to expire that month and the fact that he had turned blind eye for being widely criticized this year on the low-cost airline’s sluggish performance. Another expectation coming from investors and analysts is the introduction of checked baggage fees and a few more changes to step up to competitors in the aviation industry.

Robin Hayes to replace Dave Barger as JetBlue CEO

Cowen and Co in a statement, a month ago, said it anticipates that JetBlue will outflank the business under revitalized management and raise its price target for the airline’s shares to $15 from $10. It further gave a hint, that JetBlue might profit from adding more seats in economy class. The American low-cost airline does not charge flyers for their first checked bag, like its competitors do.

“JetBlue has struggled with their hybrid model catering to the business (traveler) and the leisure traveler,” Cowen wrote in a note. “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.”

Robin Hayes joined JetBlue following 19 years stint at British Airways, where he regulated the transporter’s operation in the Americas, besides everything else. He then served as JetBlue’s official VP and chief commercial officer from 2008 until turning into its president a year ago.

On Thursday, he promised to safeguard JetBlue’s culture, in spite of the fact that he didn’t shed light on the company’s strategy. “We will continue to expand our network in underserved markets and roll out new products that enhance the JetBlue Experience and create value for our shareholders,” Hayes said in a press release.

Too Customer-Friendly, So Why Do Investors Hate it?

Established in 1999, JetBlue started flying in 2000 with the thought of breaking the low-cost carrier pattern by offering travelers a supreme deal than its rivals. It offered luxuries, for example, free in-seat entertainment, wifi and snacks, and power outlets at each seat. A year ago it presented a business class service with lie-flat beds on trans-U.S. courses.

JetBlue tried to continue operating expenses and ticket costs low by flying a single aircraft type, Airbus A320s. It won travelers from the bigger, legacy airlines which had higher expenses. However, with those airlines lowering costs by streamlining and reorganizing in bankruptcy, JetBlue’s cost advantage reduced.

The troubled airline is presently introducing bigger A321 jets in an attempt to recapture some cost advantage, and it included smaller Embraer planes for domestic routes. Experts have criticized its moderately low profitability and proposed it would need to charge fees as its low-cost rival airlines have, something Barger had stood up to and never put to practice.

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

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