Neeleman Vacates JetBlue's CEO Post

JetBlue Airways president David Barger assumed the chief executive role from former CEO David Neeleman, who will remain with JetBlue as non-executive chairman of the board to focus on "long-term vision and strategy," including fostering partnerships with international airlines and seeking cheaper and greener jet fuel alternatives.

A JetBlue spokesperson said the carrier's board of directors made the decision shortly after its shareholders annual meeting.

Though Neeleman had been the "external face of JetBlue," said UBS airline analyst Kevin Crissey, Barger has worked with Neeleman on day-to-day operations since the carrier was founded in 1998. "We do not expect a major shift in strategy but do expect JetBlue to continue beefing up its management ranks as it has moved from a startup to a large airline," Crissey said in a research note.

"Dave is an operational genius, and we have been partners for more than nine years," Neeleman said of Barger on his blog on jetblue.com. "Knowing that Dave will be at the helm is a great comfort to me, because I know JetBlue's crewmembers love and respect him, and he will make the right decisions for the airline we created."

Neeleman had gained respect in the industry as an entrepreneur whose strengths played to launching startups, but critics questioned his ability to lead an established carrier as it continues to grow. "The carrier has moved from being the aggressive small upstart to a major player and we believe that the enterprise is now at the stage where change was needed," Calyon Securities airline analyst Ray Neidl said in a research note, adding that the move was "no real surprise." Neidl said the company in the past year had made several key management changes and said its operational breakdown at its New York-JFK hub during a winter storm in February "might have been the final determining factor" in shifting Neeleman's responsibilities.

Neeleman in his blog posting said, "Now that JetBlue is a really big airline—with 52 destinations and more than 575 daily flights—it's more important than ever for me to step back and think in terms of three years out, not three days or three months. Thinking of the next big thing for JetBlue is what I'm really good at and JetBlue needs me to draw on that strength."

JetBlue said Neeleman's new position allows him to focus on JetBlue's overarching strategy, including implications of the U.S.-EU Open Skies agreement and the growth of major airline alliances. Neeleman said among his projects as chairman is addressing the "volatile costs of jet fuel," noting congressional efforts to fund coal-to-liquid fuels. "This idea is gaining speed, and I want to be more involved in developing this idea and figuring out how to make this technology greener," Neeleman said.

Neeleman also said he would explore partnerships with international carriers. "If you're in Europe and coming to the U.S., you're probably going to arrive at JFK first. We want to make it easy and affordable for those customers to get to their desired destination on our planes. There are more than 70 international airlines that serve JFK and the majority of them do not have a partner airline—JetBlue is the perfect choice for them."

Crissey noted, "Bulls may read this announcement as Mr. Neeleman choosing to step away from day-to-day operations to look for a merger partner for JetBlue (perhaps Delta or Frontier). We do not read it that way. He did not need to give up the CEO role to do that. The company also maintains that it would not be interested in an approach by Delta. The response regarding a Frontier combination is a bit less negative though still biased against it."