JetBlue Ouster: Look at the Shares, Not the Storms

David Neeleman has been ousted

as JetBlue CEO by the airline’s board, and everybody (Portfolio,


Money, Bloomberg,


you name it) mentions at the very top of the story the service problems that

JetBlue suffered in February. Call it journalistic solipsism: journalists always

think that what they do – news – is a bigger driver of such events

than it actually is.

I very much doubt that the Valentine’s Day cock-up actually had any more than

a marginal role to play in Neeleman’s ouster. The much more important thing

is the share

price, which is now languishing near all-time lows, and is lower than it

was when the company went public in 2002. This year alone the price has fallen

from over $17 in January to under $10 at the end of April. The biggest one-day

fall during the service problems in February was just 66 cents, and over the

whole period of the disruption the share price actually rose

a little. And a large part of the fall in the stock price this year happened

before the February storms, not after them. Much of the rest of the drop happened

quite recently, at the end of April – and I suspect that final lurch into

the single digits, which had nothing to do with the February storms, was what

precipitated today’s announcement.

The main job of a CEO is to get the share price rising, and Neeleman managed

that only during 2003. Ever since then, the stock has been either falling or

moving sideways, and that’s more than sufficient reason for the board to replace

him with someone else.

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