Jet Out-Of-The-Blue

By Jason Depew, TPN staff writer

I recently flew a leg with a jumpseater from JetBlue. I always enjoy having jumpseaters from other airlines because a flight deck seems to act as a sort of neutral territory for very interesting discussions about our industry, and this case didn’t disappoint. By correlating some of the things we’ve discussed with some publicly available facts, I feel like JetBlue has the potential to make a great new home if you’re looking for an airline job. Let’s take a look.

 

Our conversation started by noting that JetBlue’s union (ALPA) and their company have reached an Agreement in Principle. This is good news and we were all excited to hear the results.

 

For those who are as uneducated on unions and airline contracts as I was a few years ago, airline pilot contracts are enacted with an “amendable” date. You can almost think of this as an expiration date…an agreed-upon time when the company and the pilot group plan to meet to talk about revising their contract…usually about 4-5 years in the future. Negotiations usually start before the amendable date, with hopes of signing before the old contract “expires.” As long as the company and the economy are healthy, this usually means pay rates go up. However, these negotiations also involve parts of the contract that are more important than pay charts. The union pushes for better “work rules” – things that yield better quality of life for the pilots. Imagine if Army helicopter pilots had the ability to negotiate air-conditioned hangars to be used for preflighting of all aircraft while deployed, or AMC pilots had the ability to negotiate better minimum rest times with TACC. Since I lean libertarian, I have very complicated feelings about unions in general. However, there’s no debate that, as a pilot, airline unions have the power to make our lives better a lot better in many ways. (I guess I’ll wallow in my hypocrisy as long as it benefits me.)

 

An Agreement in Principle (AIP) is the first step to the end of new contract negotiations. It means that, after a lot of back-and-forth, both sides finally feel like they have a workable agreement. These negotiations are conducted by a committee, assigned/hired by the union. That committee writes up the details of the AIP and takes it to the union leadership (called a Master Executive Council, or MEC at ALPA.) The MEC pours over the AIP and votes on whether they accept it and want to present the agreement to the union members (the pilots.)

 

If the AIP is approved, the union will translate the Negotiating Committee’s AIP into contract-style language. Lawyers are involved…it’s a very dirty process. The resulting document is called a Tentative Agreement, or TA. After the company double-checks that the TA matches the AIP, the union leadership presents it to the members. The members vote, and if it’s approved the TA will become their new contract (or Pilot Working Agreement) on the specified date. If not, negotiations resume until a new AIP is reached.

 

JetBlue’s contract negotiations hadn’t been going well by all accounts. There was a lot of talk about strike. The sudden arrival of this AIP is great news. Although all airline pilots must be prepared to strike during negotiations, they all know that it’s a miserable process.

 

Thanks for the lesson Emet. How does this affect me?

 

Well, you may not have been considering JetBlue as one of your top companies to work for, but I think that may need to change.

 

I don’t blame you if you haven’t even considered applying to JetBlue in the past. Their pay rates have been…let’s be nice and say “uncompetitive”…for a long time. First year pay is $53/hr, and their highest top pay rate (12+ years as A321 Captain) is only $219/hr. They’ve used a strategy similar to Southwest, Virgin, Alaska, and others…basically only flying one type of aircraft. This is a great strategy for reducing maintenance and logistical issues and minimizing training costs. However, for pilots it means that you’re never going to make big bucks or fly across oceans on a widebody jet. (Yes, yes, they aren’t a true single-type company because they do have a fleet of E190s. However, that doesn’t help the case of them giving pilots more interesting flying or higher pay. Sure, you could get to captain sooner on the E190, but between pay and types of flying, it was almost halfway back down to being a regional airline captain…a direction most of us aren’t looking to go.) They’re also very much an east-coast airline with only 1 of their 5 bases being located on the west coast (in Long Beach, CA.)

 

So: domestic narrowbody flying at industry lagging pay rates, with most bases on the east coast. I get why they may not have been attractive to you.

 

That said, JetBlue has several interesting things going for them. For many pilots, JetBlue’s based could be very attractive. If that’s the case for you, this company could be a great opportunity. Let’s take a look:

 

First off, their pay is going up. I got an unofficial look at the proposal for their new pay charts and they look good. At this point, you basically have to assume that they’re going to match the rates offered by similarly-structured airlines. Right now Southwest pilots start at $79/hr, and top out at $258/hr. Top Captains at Alaska hit $259/hr. The pay at JetBlue will have to be in that range. Whether the company likes it or not, that’s the bare minimum for this type of airline to remain competitive in attracting pilots right now.

 

So, JetBlue is probably going to be on par with competitors like Southwest and Alaska for pay. Not bad.

 

Another interesting rumor is that JetBlue’s AIP includes pay rates for the Bombardier CS100. It’s no secret that JetBlue is looking to upgrade its fleet of 60 Embraer E190s. They’ve been looking at both the E190-E2, and the CS100. No matter which one they choose, it makes sense for them to take advantage of new technology to operate more efficiently. Both will be good aircraft (though as a pilot at a company with 75 CS100s on order, I’m partial to Bombardier’s jet.) The CS100 will have to pay better than the current E190 rates because it’s a far more capable jet that will generate a lot more money for the company. Though it’d eventually replace the older E190s, it would take several years to make that transition. Adding those new aircraft would increase opportunity for movement and captain upgrades in the company in the near-term.

 

JetBlue isn’t the biggest airline out there, so you may be wondering how they have the money to buy a bunch of new aircraft. It turns out, that they’re in outstanding financial shape. JetBlue made $1.1B in profit last year, and they only have $1.3 billion in debt. Worst case, one year of profits could basically cover all their liabilities. That’d never happen though because they’re also sitting on $4B in cash! They’ve blended a strategy of being a lower-cost airline, with a culture that people like, an industry-leading domestic premium cabin (see TPG’s glowing praise,) and focused on a small number of very smart hubs to build an airline that makes a lot of money.

 

Some airlines, like United, have been faltering in the domestic market for a while and are playing catch-up by buying a bunch of B737-700s…er B737MAXes, and (expensive to operate) CRJ200s. JetBlue made about half as much as United last year, but it did so more efficiently…it  only owns about 1/3 as many aircraft. It also has $4B in cash and has only 1/10th as much debt! JetBlue has been focusing on markets neglected by other players and it’s been paying off! If (or more likely when) we go through our next economic downturn, I really like JetBlue’s financial position.

 

It’s also worth noting that JetBlue isn’t just spending their money on increased pilot pay and smaller jets. They’re also keeping the top end of their Airbus fleet fresh. They’re ordering the new A321LR, a 4000-mile jet with seats for up to 240 passengers. Southwest made the news recently announcing they’re going to Hawaii, which is nice. JetBlue will be going to Europe, and that will be an even bigger deal. (They’ll also be capable of doing Hawaii out of Long Beach, if they so choose.) If you go with JetBlue, you will probably end up with options for meaningful international flying in the future. It’ll be a tough market, competing with low-cost carriers flying the B737MAX and A321LR, but JetBlue has been succeeding by offering superior service against similar aircraft in the US. I suspect they’ll be competitive internationally as well.

 

So, JetBlue will pay well, they’ll have an even nicer fleet, they have outstanding finances, and they’re going to have opportunities for international flying. Why else might you be interested in flying for them?

 

JetBlue has put a lot of effort into making themselves a powerhouse in New York, a place where there is always money for any airline willing to work hard. They’re strong in Boston, a huge market without as many big players as NYC. (American has a hub there, but it’s one of ten hubs in the company…and no other major airlines have hubs there at all.) JetBlue’s other hubs are Orlando, Fort Lauderdale, and Long Beach…all powerhouse markets that also don’t get as much attention from the majors. These are all smart strategic positions, but they also happen to be nice places to live if you like those areas.

 

I’ve repeatedly made the case that location should be most important when choosing the airline you work for. If you’re from anywhere in the northeast, Florida, or California, JetBlue could be a great option that hasn’t been able to hire as competitively lately. This might be a great time to lock in a job at a local airline with lots of potential.

 

JetBlue’s Mint cabin is an outstanding product that people can’t get enough of. It’s important to realize their customers are extremely loyal. They’re fans of the culture, and they like the aircraft. They have a strong following in the areas they serve, and they’ll be able to use that to expand. This means more money as a company, and better job security as a pilot.

 

JetBlue has had a tougher time attracting pilots lately because of their weak pay rates and fleet makeup. That means they are a very unique opportunity for the next few years. They’re eager for pilots like you, and things are only going to get better at the company. If you’re considering a Regional Airline Touch & Go, I feel like you should also apply to JetBlue, as long as the locations make sense. You’ll get better pay to potentially fly bigger jets at great bases.

 

While this is a great opportunity for a military or high-time regional pilot to get into big airline flying big aircraft for real pay, JetBlue is also innovating to make themselves attractive for younger pilots. They have several Gateway Programs designed to help you start an airline career with them. These programs offer to take you from a zero-time pedestrian to an airline plot in as little as 4 years. That’s impressive, but the big benefit of these programs is that when you interview (with as few as zero hours) you get hired by JetBlue. You know from day one that you’ll have a job waiting for you as soon as you meet eligibility requirements. They’ll help you secure funding for flight training and finding a job to build the time you need to get your 1500 hours and ATP. (They have a partnership with CAE for you to do flight instruction, and they have a sort of farm-team airline, Cape Air, where you can build time flying multi-engine aircraft for an air carrier. It’s challenging, often single-pilot flying, but if you don’t want to spend 1200 hours instructing to build time, it’s a good option.)

 

With a Gateway Program, once you meet their requirements you start flying for JetBlue. I’ve already shown what I believe to be a compelling argument that it’s a great company with lots of potential. After you’ve completed any obligations to JetBlue, you’ll have the option to apply elsewhere…and a resume that makes you competitive for those jobs.

 

Before we finish this discussion, I want to take a moment for some fun speculation. This is probably meaningless conjecture, but please join me on a quick dive down the rabbit hole anyway. Warren Buffett made the news recently when he suggested that he might be interested in buying an entire airline. The news media says that would have to be Southwest, but I say: why not JetBlue? Their financials should make them extremely attractive to an investor, and they have room to grow if backed by some extra capital. Would JetBlue be an even better place to work if the master of American investing owned them? I can’t say for sure, but I doubt that it’d be worse.

 

Individual billionaires aside, what about other potential deals involving Jetblue? Alaska and Virgin are working their way through our industry’s most recent merger. It’s a bit of an odd marriage, but both are strong companies. With this deal, they’ve both drastically expanded their network and become a much larger, nationwide airline. What if that deal worked out very well and they decided to go even bigger? An Alaska/Virgin + JetBlue deal could truly turn a larger, combined company into a powerhouse. They’d have even better coverage and they’d be able to solidify a brand of premium domestic service while expanding into international operations. This new airline would be large enough to go toe-to-toe with the four largest passenger airlines in the country. While this is the merger that makes the most sense to me, there are other options out there too. JetBlue could take the lead in a merger with other companies…Spirit and Frontier are other all-Airbus companies with growing networks. There are several scenarios where a JetBlue merger gets very interesting.

 

Again, please understand that this is pure speculation. I would not buy JetBlue stock or apply for a job there expecting one of these scenarios to happen. However, if any scenario along those lines does play out, the pilots already working at JetBlue will be in an incredible position.

 

Thanks for bearing with me…I’ll end my speculations there and get back to the point:

 

If you’re not sure whether you can get to a Legacy carrier right now, or you’re not sure you want to work for one of them, I think JetBlue is a unique opportunity. They’ve had a hard time attracting pilots because of pay, but that will be fixed within months thanks to a new contract. For a military pilot, a high-time regional pilot, or a low-time pilot who needs a bit of a guarantee before jumping into this industry with both feet, JetBlue needs you and is looking to hire. They’re standing on solid financial ground, and they’re in the process of improving an already great fleet. They’re a domestic airline, but they’re going to give pilots opportunities for international flying in the future.

 

If nothing else, try working for them as if it’s a regional airline touch & go. Worst case, you move on when a Legacy carrier calls…though I can see a lot of reasons why you might fall in love with JetBlue and just decide to stick around. Since location should always be your #1 priority in choosing an airline to work for, I say that if you want to live near Boston, New York, central Florida, or Long Beach, JetBlue should be one of the airlines at the top of your list.

 

What do you think? Do you want to settle down somewhere with a JetBlue base? Are you going to consider applying, or am I out to lunch? Leave a comment and let us know what you think.

 

– Emet