A man traveling on an employee buddy pass (and thus presumably flying for free) was ordered to sit in the bathroom of a packed JetBlue Airways Corporation (NASDAQ: JBLU) flight. He is now suing the company for $2 million.
Gokhan Mutlu claims that the pilot of a JetBlue flight from New York City to San Diego ordered him to sit in the bathroom after a flight attendant claimed his seat. The attendant apparently felt that her jump seat was uncomfortable; since Mutlu was not an employee, he couldn't sit in her jump seat. And on a full plane, that left the toilet as the only seating option on the five hour flight.
Mutlu wasn't crazy about the idea, but the pilot soon set him straight. According to the lawsuit, the pilot said that "he was the pilot, that this was his plane, under his command that (Mutlu) should be grateful for being on board." So the bathroom it was. Eventually, Mutlu was allowed to return to his original seat.
Whatever really happened, JetBlue can't afford any more bad press. The airline is still trying to make customers forget about trapping passengers on their planes for up to nine hours during bad weather last year.
On the other hand, maybe this isn't such bad news. It might just show that JetBlue pilots have a wicked sense of humor. Given the crowds expected on planes and runways this coming summer, that could be a good thing. JetBlue could even build an ad campaign around it: JetBlue - there's always an extra seat!
After hitting a one-year high of $11.99 in July, the stock hit a one-year low of $4.30 in January. JBLU opened this morning at $5.10. So far today the stock has hit a low of $4.50 and a high of $5.11. As of 12:40, JBLU is trading at $4.57, down $0.36 (-7.3%). The chart for JBLUlooks neutral and deteriorating, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a December covered call at the $5 level. A covered call is an options position that combines the purchase of stock with the sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 34.4% return in eight months if JBLU is above $5 at December expiration. JetBlue would have to fall by more than 18% before we would start to lose money. Learn more about this type of trade here.
Those were the two airlines that came out on top of a national survey of airline quality released today that underscored the sorry state of the industry. Anyone who has flown since 9-11 knows that getting your teeth pulled is more fun. Planes are filled to the brim and are often late. Luggage often goes on magical mystery tours that bypass your destination.
Last year was more of the same, according the Associated Press "There were more lost bags, more bumped passengers, more consumer complaints and fewer on-time flights than in the previous year," the story says. "The rate of consumer complaints was up 60 percent. US Airways (NYSE: LCC) had the most complaints last year. Southwest (NYSE: LUV) had the fewest."
Bad airlines are bad for the environment because it encourages more casual fliers to drive to their destinations. Even with soaring gas prices, flying isn't worth the trouble. I may have to fly this summer and I'm already dreading it. --Freelance writer Jonathan Berr edits the blog Ketchup and Eggs.
I have had some clients ask me, what industry I think will benefit from the $600 rebate checks that are due to be sent out as part of the U.S. economic stimulus package. I think airlines will benefit, especially lower cost carriers like Southwest (NYSE: LUV) and Jet Blue (NASDAQ: JBLU).
The USA Today has an article about the kind of vacation you can have for $600. The article says: "With most Americans expecting to receive a tax rebate of up to $600 ($1,200 for married couples), there are plenty of ways to get the most vacation for your buck, say travel experts. Whether it's a cruise, a tropical paradise, or family travel, these trips can all be done for under $600 a person."
Because we aren't talking about flying around the world or across the Atlantic for that measure, trips to Las Vegas or Orlando, for example, will fit the family, and of course people need a way to get to these destinations, so that's how the airlines become interesting. Throw into the mix potentially stable or even lower fuel costs, and for investors looking for a way to play the "Rebate check" game, you may want to take a look at the airlines.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 4/2/08
Ruling that it's not in their jurisdiction an appeals court rejected a New York state law that would have required airlines to provide food, clean toilets, water, and fresh air to passengers stranded on a plane that's been delayed. The NY law came in response to last winter's fiasco at JFK airport when multiple airlines, most notably JetBlue Airways Corporation (NASDAQ:JBLU) were stuck on the runway for 10 hours and passengers had no food, or clean toilets.
According to an AP report: "The court said that while the goals of the law were "laudable" and the circumstances prompting its adoption "deplorable," only the federal government has the authority to pass such regulations.
"If New York's view regarding the scope of its regulatory authority carried the day, another state could be free to enact a law prohibiting the service of soda on flights departing from its airports, while another could require allergen-free food options on its outbound flights, unraveling the centralized federal framework for air travel," the court wrote.
JetBlue Airways Corporation (NASDAQ: JBLU) shares are rising today even after analysts at UBS and Lehman Brothers have reduced earnings estimates and downgraded some of JBLU's competitors this morning, including UAL Corp. (NASDAQ: UAUA) and US Airways (NYSE: LCC), on record fuel costs and recession worries. JBLU shares are moving higher as oil prices have fallen below $100 a barrel on data suggesting lower demand for fuel in a weakening U.S. economy. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on JBLU.
After hitting a one-year high of $12.32 last March, the stock hit a one-year low of $4.30 in January. JBLU opened this morning at $5.23. So far today the stock has hit a low of $5.00 and a high of $5.47. As of 12:15, JBLU is trading at $5.46, up 46 cents (9.2%). The chart for JBLU looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a September covered call at the $5 level. A covered call is a combination option and stock position that combines the purchase of stock with the sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make a 22.4% return in just six months if JBLU is above $5 at expiration in September. JetBlue would have to fall by more than 24% before we would start to lose money on this trade.
JBLU hasn't been below $4, which would be the break-even point, at all in the past year and has shown support around $4.50 recently. This trade could be risky if the price of fuel, but even if that happens, this position could be protected by the support the stock might find just below $5, where the stock has bounced twice in the past few months.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in JBLU.
Sometimes in a period of uncertainty, a look back can provide some perspective. So here are a few highlights from BloggingStocks on March 16, 2007,a year ago today.
As you can tell from this post on my blog, I am no fan of value investing. While I believe investors, especially smaller investors, should partake in more aggressive strategies, I do respect its high priest, Warren Buffett. Since its release late Friday last week, his annual letter to Berkshire Hathaway (NYSE: BRK.A) shareholders has already been dissected here, here and here by those much smarter than me, but I offer my take on four important passages in his remarkable letter: "You only learn who has been swimming naked when the tides goes out – and what we are witnessing at some of our largest financial institutions is an ugly sight."
JetBlue reported a narrower-than-expected loss in the fourth quarter, and its first full-year profit in three years. It also announced that it's negotiating a deal with investor Deutsche Lufthansa AG.
JetBlue lost $4 million, or 2 cents a share, in the quarter ending December 31. It posted a profit of $17 million, or 10 cents a share, in the same quarter of 2006. An increase in traffic and operational improvements helped offset rising fuel costs. Revenue rose 16.6% to $739 million. Analysts surveyed by Thomson Financial had expected a loss of 5 cents a share on revenue of $731 million.
For the full year, JetBlue earned $18 million, or 10 cents a share, versus a loss of $1 million, break-even on a per-share basis, in 2006. Revenue jumped 20.2 percent to $2.84 billion. Wall Street had expected a 2007 profit of 7 cents per share on revenue of $2.83 billion.
Shares surged 20.24%, or $1.00, to close at $5.94. Shares had fallen to a 52-week low of $4.30 last week.
BloggingStocks readers and AOL Money & Finance visitors have spoken, and below are the Best & Worst of 2007. (See the individual posts for full results.)
Company of the Year:Google, internet search provider turned diversified services giant, received 51% of the vote, beating such strong contenders as Apple and Coca-Cola.
Hottest Gadget of the Year: After all the hoopla surrounding the launch of the iPhone, it's no big surprise that it tops this category, with 47% of the vote, besting second place finisher the Nintendo Wii.
Portfolio.com featured its picks for the ten dumbest moves by CEOs in 2007. The list shows a nice range and depth of stupidity on the part of CEOs -- and it hasn't gone unnoticed that there are no women on this list of dummies. Here are their picks and my two cents:
Paul Wolfowitz, World Bank -- Getting his girlfriend at the bank a transfer and a raise. Need we say more?
Steve Jobs, Apple (NASDAQ: AAPL) -- Ticking off early adopters by slashing $200 off the original price of the $600 iPhone shortly after its debut. Nothing like causing your loyal customers to think twice before they run right out to be the first to buy Apple's next new gadget.
Chris Albrecht, HBO -- An alleged assault of his girlfriend in Las Vegas ended in his arrest. And then came the news that he did something similar in the early 1990s. Not the kind of headlines you want from your CEO.
To say that things haven't gone JetBlue's way in 2007 may be an understatement. in February, thousands of fliers were left stranded in jam-packed aircraft that never took off because of inclement weather. To Neeleman's credit, he quickly owned up to the blunder and enacted a "bill of rights for customers" and apologized until he was blue in the face -- no pun intended.
Since his departure, Neeleman tried his hand at blogging, though his "flight log" hasn't had a new entry since November. Maybe he's busy counting his money. InsiderScore estimates that he's sold more than $30 million worth of stock over the past 18 months. That should help heal his wounded pride. Too bad that investors aren't so lucky.
Germany-based Lufthansa's announcement late Thursday that it would buy a 19% stake in JetBlue (NASDAQ: JBLU) could lead to other airline deals, as industry players seek both economies of scale and greater international reach, according to one analyst familiar with the sector. The Lufthansa-JetBlue deal requires the approval of U.S. federal regulators.
"This could be the deal that gets the airs [airlines] in merger-mode again," analyst C. Leonard Bauer told BloggingStocks on Thursday.
Under U.S. law, no foreign airline can own more than 25% of a U.S. airline, and there are other restrictions that limit the foreign company's influence.
Lufthansa announced Thursday it would pay $7.27 per share for 42 million new JBLU shares, or about $300 million. That amounts to a 19% stake at Thursday's closing price, the airlines said in a joint statement Thursday. Lufthansa will also receive a seat on JetBlue's board.
Improved sector conditions
Bauer said three factors had reduced merger and acquisition talk among the airlines for several years: sub-par sector cash flow, better merger/acquisition and partnership opportunities in other sectors, and regulation.
"For the longest time, U.S. airlines were not that attractive, particularly the weaker ones, but now cash flow has improved, the sector's growth prospects are adequate and the new 'open skies' rule will mean more competition across the Atlantic, so airlines have to be ready," Bauer said. "An airline could suddenly find itself vulnerable in a previously light-competition market, so they need to be ready to partner, or to merge or buy an airline for access to new markets."
Under the "open skies" agreement, a slow deregulation of flight routes and markets between the United States and the European Union will begin in April 2008.
"The last thing a major carrier in the United States or Europe wants, for that matter, is to wake up one day and find that your market has been penetrated, and you don't have comparable positions in some of those open skies markets," Bauer said.
For the first nine months of 2007, Lufthansa reported earnings of $2.33 billion, or 1.60 billion euros, and revenue of $23.9 billion, or 16.4 billion euros.
Well, at least the seat was free. 
Here are some highlights from this past week's 
Anyone planning a vacation this summer should remember two words: 
As you can tell from 
When
Germany-based Lufthansa's announcement late Thursday that it would buy a 19% stake in 
Just how high will U.S. gasoline prices rise?
Nordstrom and Kohl's post smaller-than-expected Q1 profit declines
Oil hits record $127.43 on supply concerns, raised Goldman forecast
