Wall Street blues: Investors punish JetBlue for ice storm

NEW YORK — Memories of the Valentine's Day ice storm that grounded more than a thousand JetBlue flights and tens of thousands of passengers didn't stop Suzanne Dohm from flying the New York-based airline.

"One incident like that is not going to turn me off. Those were extraordinary circumstances," said Dohm, of New York, while waiting on a recent day for a JetBlue flight at John F. Kennedy International Airport. "I know what it was like that day. It was horrible."

Customers may be willing to forgive the airline that offers free snacks and DirecTV at every seat, but investors have not: Shares of JetBlue Airways Corp. have been on a long slide in recent months and now trade for little more than half their January peak.

One big concern is that JetBlue has been forced to scale back its growth plans as it faces new competition from startup Virgin America and other carriers. Wall Street analysts say the seven-year-old carrier's high debt load, along with its chronically congested JFK hub and reliance on cutthroat domestic routes, are crimping profits and leaving it vulnerable to a takeover.

Indeed, JetBlue's revenues per available seat mile have grown only 9.4 percent over the last five years, compared to growth rates of 23.5 percent at Southwest Airlines Co. and 28.6 percent at AMR Corp., which operates American Airlines. Per-seat costs, meanwhile, have jumped 29.4 percent at JetBlue, compared to a 20.7-percent increase at Southwest and a 3.3-percent increase at AMR. Fuel expenses, which make up nearly a quarter of airline costs, have risen sharply in recent years. Labor expenses have also increased, though more slowly.

JetBlue's new management team knows that boosting the airline's financial performance is imperative. But they also have no choice but to keep their focus on operational issues. Another systemwide misstep could be fatal.

JetBlue made headlines in February when an ice storm that socked the Northeast collided head-on with the carrier's policy of not canceling flights ahead of bad weather. JFK was particularly hard-hit as planes continued to arrive and none was allowed to leave. Thousands of people were trapped on planes for hours or stranded in terminals for days.

"We gridlocked ourselves," said Dave Barger, named chief executive in May when JetBlue's board asked founder David Neeleman to step down.

Neeleman, who remains chairman, was criticized for spending more time apologizing than fixing problems. JetBlue didn't fly a full schedule for days.