Though JetBlue Airways Corp. (NASDAQ: JBLU)'s Chief Executive Dave Barger seems to be bringing much needed focus to the plucky airline whose reputation was damaged by service disruptions in February, investors should continue to avoid the stock for now.
JetBlue currently trades at a forward price-to-earnings multiple of 21, higher than Southwest Airlines Corp. (NYSE: LUV) and American Airlines parent AMR Corp. (NYSE: AMR), so the shares are no bargain. Plus, Barger told the Wall Street Journal that he wasn't interested in selling the airline, which rules out any buyout premium.
"I wouldn't welcome any overture. In an acquisition, the product would get lost. The focus on costs would get lost," he told the paper. "Most importantly, this relationship we have with our crew members, 11,500 strong, [would be lost]. I just don't think that's a good solution for us."
Though that statement may anger some shareholders, who have watched JetBlue plunge more than 20% this year, Barger is doing the right thing. It's going to take a while for the company to turnaround. Besides it's unlikely that founder David Neeleman, who Barger replaced as CEO, would be interested in selling.
Maybe the situation will change in a few months once the company begins to turnaround, which will eventually happen, though it will be a tough road for a while.
For example, JetBlue said yesterday that it expects passenger revenue to increase by 5% to 7% in the second quarter and 7% to 9% for the year, down from the company's April guidance, which forecasted second-quarter revenue to rise 6% to 8% and 2007 revenue to increase by 7% to 9%, according to Reuters.
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