Robin Hayes, JetBlue CEO, announced his resignation from the carrier. But the timing and transition leaves more questions than answers.
If you are considering booking travel or signing up for a new credit card please click here. Both support LiveAndLetsFly.com.
If you haven’t followed us on Facebook or Instagram, add us today.
Robin Hayes Announces Resignation
In a surprise announcement this week, JetBlue Airways CEO, Robin Hayes, announced his retirement.
“The extraordinary challenges and pressure of this job have taken their toll, and on the advice of my doctor and after talking to my wife, it’s time I put more focus on my health and well-being,” he said in the statement.
Hayes, 57, has been chief executive since February 2015 and JetBlue’s shares have declined about two-thirds since then as of the close on Monday. The stock fell [14.4% for the week]” – Yahoo! Finance
JetBlue announced that Executive Vice President, Joanna Geraghty, will take over as president and Chief Operating Officer following Hayes’ departure. She’s a 20-year veteran with the carrier and many have suggested will be a stabilizing force.
Since joining JetBlue, Hayes has expanded the carrier throughout Latin America, added services to Europe, and attempted two acquisitions. The first was for Virgin America, which JetBlue lost to Alaska; the second was Spirit Airlines, for which the airline is defending its purchase against several state attorneys and the Department of Justice. A decision in the case was speculated before the end of 2023 but didn’t materialize.
Precarious Timing
Resignations at public companies, whether for health reasons or at the behest of the Board of Directors, typically involve a longer transition. Geraghty will assume her role on February 12th, less than a month from now. That doesn’t leave much time for details to be worked out. Doug Parker, who left the CEO post at American in 2022, had a transition period of nearly four times as long.
Given the critical moment JetBlue is facing after this trial, the announcement came at a precarious time. Assuming for a moment that Hayes received the advice from his doctor weeks earlier than the January 8th, 2023 announcement, he may have been waiting for the ruling first. It’s possible that he couldn’t wait any longer after that verdict never arrived.
It’s also possible that while the stress and pressure of running JetBlue may be immense, and he may have health problems as a result, perhaps the board was giving him a chance to save face following a decision to move in a new direction. I don’t have any inside information, and I’m not suggesting that Hayes was asked to resign but health concerns and spending time with family are common reasons provided by companies that want to be respectful to the leader and quiet about turmoil. To that end, the stock price is down more than 50% from its July high, the carrier lost against the DOJ for its NEA codeshare agreement and on-time performance slipped to last in July, below Frontier, Allegiant, and Spirit for example.
But with the case at a critical stage, it’s a really difficult time to step down.
What Happens With The JetBlue-Spirit Merger?
The outcome of the case now holds so much more weight. If the deal is allowed to proceed, Geraghty will be in command of not only the fifth-largest airline in the largest air market in the world but will also have to straddle a very unique collaboration. When prior acquisitions and mergers took place as with Northwest Airlines and Delta Air Lines, for example, the two operated in the same market strata. They were both large international carriers with significant domestic and international footprints operating in a hub and spoke environment. They both depended on operating premium business-heavy routes; the list goes on.
These two are very different carriers with a common fleet type. Spirit customers are unlikely to convert to JetBlue and absorb expected price increases. Spirit’s ULCC model will die as the planes are painted. But can JetBlue grow with its own model when its fleet size nearly doubles? Both JetBlue and Spirit have lost money in the last couple of quarters, Geraghty will have to overcome that too while taking on tremendous debt to finance the deal and assuming the payments on the highly desired new aircraft.
The deal itself may also come under new and unanticipated scrutiny given that performance has faltered and switching leadership is a significant shift.
If the acquisition is struck down, Geraghty has an even larger challenge ahead. She will face a breakup fee with Spirit of $400 million which the carrier will desperately need for its future. The airline would have to decide whether to continue an expensive legal battle and challenge the decision or to pay the penalty.
Another writer floated the concept that JetBlue may file for bankruptcy because of its recent performance, the cost owed to Spirit, and the ability to break leases and labor contracts. For many reasons, this seems like an unlikely step but the notion has been floated and if nothing more than trying to offer all angles, there’s that one to consider as well.
Conclusion
I don’t doubt that Mr. Hayes has faced health troubles since taking the reigns at JetBlue. He has made major strides for the carrier, bet big for its growth, and thought outside the box. Regardless of the reasoning, the timing of his departure is at a critical stage in which the carrier which will change dramatically whether it wins or loses its case and the transition is very short. His legacy was one of a transformative figure in the industry, and this writer wishes him the very best as he steps aside.
What do you think?
Dude will never have to work another day in his life and gets to enjoy doing anything he wants. At 57 that should be everyone’s goal and certainly has been possible for those of us born in the 60’s, worked hard and invested right, even in basic mutual funds.
Look around on your next flight and think about the guys clearly still working in the 60’s and don’t make their mistakes in life. Remember, no one plans to fail, they just fail to plan.
And yes I know we have 2 senile clowns looking to be President at 80. That’s just greed at its finest.
Word from a number of long time JetBlue folks I know is that Hayes had a cardiac event a few weeks ago.
While I don’t want to speak too much about his health. Those in the know, and the word behind the scenes from the inner circle is that he had a heart attack about 3 weeks or more ago right around Christmas.
Any company sans a succession plan is toast. And as stated above, Ms Geraghty has been around for 20+ years. A few secrets lurk around the corner from COO to CEO; no big deal. The biggest headache is the BOD which is more of a hinderance than of value.
Also, this is not the first airline consolidation. Each of the big four are composed of bits & pieces of other airlines acquired along the way; the devil is in the details. Should Mr Geragthy get the tap on the shoulder, she needs to hit the ground running. Each moment of hesitation is a million dollars down the drain. Spirit provides the mid west and southwest footprint via a common fleet and trained pilots. The northeast (NYC & BOS) is tapped out for growth via congestion and air traffic control constraints. B6 needs to move west.
To clarify, the above should read “Should Mr Geragthy get the tap on the shoulder from the US Courts, ….”
Moving the COO into the CEO’s role makes perfect sense.
Except in this case, the COO was not good at her job so this is a textbook case of failing upward.
Having said that…this could be an opportunity for JetBlue to bring someone in who can actually fix the operation.
I guess we’ll see.