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Sunday, October 26, 2003

JetBlue grounds Atlanta venture


Discount airline takes a beating from competitors

By The Associated Press

ATLANTA - Discount airline JetBlue Airways is pulling out of Atlanta six months after it arrived, canceling flights to the West Coast because of intense competition from Delta Air Lines and AirTran Airways.

The setback was noted Friday by J.P. Morgan airline analyst Jamie Baker, who credited Delta with "taming one of its low fare competitors" and downgraded JetBlue's stock to "underweight."

Shares of JetBlue fell $5.40, or nearly 9 percent, to close at $56.40 Friday in New York Stock Exchange trading. Investors apparently considered JetBlue's fate in Atlanta a bad sign for discount carrier AirTran, too, as its stock price dropped 90 cents, or nearly 6 percent, to close at $14.90 on the NYSE.

JetBlue entered the Atlanta market to challenge Delta' dominance between there and Long Beach, Calif., and the move roughly coincided with Delta's launch of its own discount airline, Song. It prompted AirTran to add coast-to-coast flights.

JetBlue's Atlanta-Long Beach flight was the first nonstop service to the West Coast by a discount carrier, resulting in fares for advance-purchase flights that were as low as $176 round-trip at the height of the price war.

But on Thursday, JetBlue officials said they would pull out on Dec. 4, ending service to Long Beach and Oakland, Calif. "We just thought it was a little crazy," JetBlue CEO David Neeleman said.

AirTran President Bob Fornaro said JetBlue, which has a hub at John F. Kennedy Airport in New York, was at a disadvantage because it doesn't have an Atlanta hub feeding customers into its flights.



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