Interview: JetBlue sees new sleeper seats aiding profit

Datalex

01/07/2014 22:07

* Mint service offered on U.S. cross-country flights 
    * Carrier equipping itself to offer more ancillary products 
 
    July 1 (Reuters) - JetBlue Airways  JBLU.O  expects its new 
sleeper seats for U.S. cross-country flights to add to profits 
even as some analysts question whether it will make a meaningful 
difference to the bottom line. 
    Deviating from its all-coach format, JetBlue now offers 
fully reclining seats on flights between New York and Los 
Angeles. The service, called Mint, includes some private suites 
with doors that close, tapas-style food and amenity kits. The 
seats are located at the front of the plane. 
    "We think it's going to ramp up pretty quickly to 
profitability," JetBlue President Robin Hayes said in an 
interview on Tuesday. "We're booking weeks out and almost every 
flight is going out full and we continue to see that trend into 
the July timeframe."  
    The Airbus A321 planes with the service have 16 fully 
lie-flat seats. JetBlue plans the service on flights between New 
York's John F. Kennedy airport and San Francisco starting Oct. 
26. 
    Hayes said JetBlue could expand Mint to other routes over 
time. 
    JetBlue launched Mint in response to customers who said they 
were skipping the carrier on cross-country flights because it 
did not offer premium seating. The seats, which recline to 
convert into flat beds, are initially priced from $599 to $999 
one way. Hayes said the average fare was likely to rise but 
declined to give a timeframe. 
    The new seats debut as New York-based JetBlue faces pressure 
to improve revenue and hold down costs. Delta Air Lines  DAL.N  
and American Airlines Group  AAL.O  have also upgraded seating 
on coast-to-coast routes. 
    Shares of JetBlue closed up 1.2 percent on Tuesday at 
$10.98, just below a year high of $11.12 reached on Monday. 
JetBlue's stock has risen about 28 percent this year, while 
Delta and low-cost provider Spirit Airlines  SAVE.O  have seen 
their shares rise about 46 percent and 39 percent, respectively, 
year to date. 
    JetBlue "has a good product, it's just that in a very price 
sensitive industry they need to figure out how to monetize it 
better," said Savanthi Syth, an airline analyst with Raymond 
James. Syth said she expects Mint to add six or seven cents in 
earnings per share to JetBlue. 
    "It's not big enough to make a big difference to earnings 
but we think it will be a positive product," she added. 
    Wolfe Research analyst Hunter Keay said in a May 16 note 
that Mint could be "earnings negative," since one Mint seat 
takes up space of three coach seats.  
    Hayes, who was named JetBlue president late last year, said 
the carrier was working with Datalex PLC  DLE.I  on a new 
Web-based merchandising platform to be rolled out in the second 
half that will enable it to offer in-plane products. 
    "We've been making a lot of the investments in the last two 
to three years that allow us to monetize and develop new 
products and services for customers which will absolutely grow 
our ancillary revenue stream," Hayes said.  
 
 (Reporting by Karen Jacobs in Atlanta; Editing by Bernard Orr) 
 ((karen.jacobs@thomsonreuters.com)(1-404-493-3656)(Reuters 
Messaging: karen.jacobs.thomsonreuters.com@reuters.net)) 
 
Keywords: JETBLUE AIRWAYS SEATS/