When David Neeleman stepped down as CEO of JetBlue Airways Corporation (NASDAQ: JBLU), the company he founded, the stock rallied. Some speculate that with Neeleman no longer in charge, the airline could be for sale. While anything is possible, I wouldn't get too excited, for a whole bunch of reasons.
First of all, Neeleman is only resigning as CEO. He will stay on as chairman and owns about 6% of the company. So if he doesn't want the company sold, it still probably won't happen. And even if he does, there's still the problem of finding a buyer. While the shares are beaten down, they're still not that cheap by any metric that I can see.
And then there's the reputation of the airline industry. As billionaire Richard Branson has said, "The fastest way to become a millionaire is to start off a billionaire and then buy an airline." Most of the major airlines are emerging from bankruptcy and are probably in no rush to take on a huge amount of debt buying JetBlue.
So while takeover speculation might be fun, it just doesn't really seem justified here.
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Reader Comments (Page 1 of 1)
5-12-2007 @ 10:54AM
Ben said...
All those rinky dinky fly by night so called airlines are not going to make it,they like to go after the quick bucks have pisspoor maintenance and cheap labor, it won't work.People are smart to stay with a major airlines even if you have to pay a few dollars more for a ticket,it might even save your live I for sure don't fly those dinky outfits.
Retired - Ex aircaft mechanic.