JetBlue orders 100 jets, may add routes

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JetBlue orders 100 jets, may add routes
By Barbara DeLollis, USA TODAY

Fast-growing JetBlue Airways announced Tuesday an order for 100 more jets=20
to power a low-fare invasion of dozens more routes by 2011. The New=20
York-based airline =97 known for low fares, a hip style and innovations such=
=20
as live TV on its jets =97 said it will be the launch customer for the=20
100-seat Embraer 190. Embraer is a Brazilian company that also makes=20
smaller jets for regional airlines. The order is a departure for JetBlue,=20
which now flies 162-seat Airbus jets in mostly big-city markets. With the=20
smaller Embraers, JetBlue can profitably enter routes with fewer=20
passengers. CEO David Neeleman says that JetBlue could lower fares 45% to=20
66% in some smaller markets. "This is a whole different strategy," Neeleman=
=20
said. "This is more like JetBlue Junior." JetBlue said the order is worth=20
$3 billion to Embraer, although launch customers for a new aircraft model=20
typically receive attractive discounts. The first seven Embraers will=20
arrive in 2005. The 3-year-old airline could grow from 42 jets now to 290=20
by 2011 =97 slightly more than US Airways has =97 if it takes delivery of=
 all=20
the Airbus and Embraer jets it has ordered. JetBlue ordered 65 more Airbus=
=20
jets two months ago. Unlike many airlines, JetBlue is profitable.=20
First-quarter net income was $17.4 million, up from $8 million a year ago.=
=20
JetBlue's shares lost $1.63, or 4.7%, to close at $32.98 Tuesday.

Airline analyst Ray Neidl of Blaylock & Partners in New York says the small=
=20
jet strategy carries some risk. A second aircraft type will increase=20
expenses for maintenance and flight crew training at the same time that=20
JetBlue is absorbing costs of launching routes that might not be profitable=
=20
immediately. Yet, Neidl says, the move offers JetBlue more growth=20
potential. JetBlue's ideal markets now have at least 600 passengers a day=20
each way, and there are about 300 of those, Neeleman said. The number of=20
possible routes triples if JetBlue considers those with 200 to 500=20
passengers a day, he said. "You can go crazy thinking about all the places=
=20
we could fly," he said Tuesday at a Merrill Lynch conference in New York.=20
JetBlue, with concentrations of flights at New York's Kennedy Airport and=20
Long Beach, Calif., now flies to 22 cities in the USA and Puerto Rico.=20
Neeleman would not identify any new routes Tuesday. Most of the 100-seat=20
jets will be used for new routes, but some will be used to add more daily=20
flights on routes served by Airbuses.

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