JetBlue Vows to Win Back Passengers

JetBlue Airways founder and chief executive David Neeleman addresses his company's recent problems during an interview at the company headquarters in Queens, New York, Tuesday, Feb. 20, 2007. JetBlue Airways introduced a customer bill of rights that promises vouchers to fliers who experience delays, hoping the move wins back passengers after an operational meltdown damaged its brand and stock price. (AP Photo/Henny Ray Abrams) (Henny Ray Abrams - AP)

"What we did was wrong and we didn't have a plan," Neeleman said. He called last week a "somber" time.

To prevent future breakdowns, Neeleman said JetBlue will put in place a reserve force of employees in the New York area who can aid the airline in a crisis.

"Had we had that in place for this event, it would have been much better," Neeleman said.

Neeleman said JetBlue's reservation operations center in Utah was also overwhelmed.

"We are addressing that very aggressively," he said.

Since those "cascading events," Neeleman has been making the media rounds, trying to convince investors and customers that the airline will recover as it struggles to keep fares down and earn a profit in the face of mounting costs related to fuel and other issues.

"This is a great company," he said. "We've had seven years of unbelievable service."

The debacle is sure to hurt JetBlue's bottom line. Prudential analyst Bob McAdoo wrote in a note to investors that "revenues and added expenses will cost the company about 4 to 6 cents in the March quarter."

Neeleman said he expects JetBlue to hand out $26 million in refunds and credits and another $4 million in incremental expenses such as paying overtime for crews and chartering airplanes.

Neeleman said the company would provide more details about those costs in a filing later Tuesday with the Securities and Exchange Commission.

It's not clear if the damage to JetBlue will hurt its future prospects. McAdoo suggested the effects would be temporary.

"Although the press coverage of JetBlue's problems has been widespread, the problems experienced are not likely to be repeated nor any negative impact on the company's reputation be long lasting," he wrote in a note to investors. "Other new airlines have experienced similar problems with few lingering image problems."

Terry Trippler, an airline expert, said JetBlue will overcome this public relations nightmare. He said the airline should be able to continue to tout its service and discounted fares.

"People will forgive them for this bad week, and people will continue to book JetBlue," he said, because travelers get a "fair price and good service."

But he questioned the bill of rights, saying it could set a bad precedent and will likely reverberate throughout the industry.

"If you start paying people when you're late, other airlines could be forced to join and then you're in a bidding war," Trippler said. "And when you're selling tickets for a $100 and giving $100 vouchers away, something has got to give. It doesn't make good economic sense."

David Stempler, president of the Air Travelers Association passenger advocacy group, said the bill could also put "subtle pressure, for instance, on pilots or mechanics who might rush what they're doing to avoid some of these penalties."