Breakout

JetBlue CEO on 10 Years of Success: National Unions Are Not Necessary

Jeff Macke
Breakout

JetBlue Airways (JBLU) went public 10 years ago this month. The company was founded in 1998, on the cusp of the dot-com crash, and survived through the 9/11 terrorist attacks, a spike to above $140 a barrel crude oil, and a near-total collapse of the global financial system. Most airlines couldn't survive that volatility. In fact, most airlines didn't; mergers and bankruptcy has been the industry norm, not the exception.

You don't have to tell this to CEO Dave Barger—he's been with JetBlue since the very beginning. Barger co-founded JetBlue in 1998 and took over the corner office as CEO in 2007. In the attached clip Barger sits with me at the NASDAQ market-site to discuss where the company has been and how it hopes to continue to compete.

"These 10 years have been a bit crazy," Barger says, which is an understatement. He says the only way JetBlue has survived, at least relatively unscathed, is that the company has "had to adapt over time by being open to change."

Which is, of course, a business cliche. Then again, it's working for him. Barger says it's nothing new in a world where US Airways (LCC), which has been bankrupt twice since JetBlue's IPO, attempts to merge with American Airlines, which is currently bankrupt.

"Add in the bankruptcy of Delta (DAL), Continental, and United [now merged and trading as United-Continental (UAL) and Northwest]," he chuckles, "it's very difficult to compete against airlines in bankruptcy." The endless merger and acquisition process has "stripped out all the over-population of available seat miles in the in the United States."

As for US Airways and American Airlines, Barger says JetBlue's game plan has been, and remains still, to stay a stand-alone business.

"Culture is so very important to us," Barger says. Barger says there's a bigger pie to split without unions, in part by eliminating the costs of go-between union chiefs, to let the two sides "communicate openly and honestly."

"We don't have national unions in place at JetBlue. We don't think it's necessary to pay somebody to speak on your behalf," says Barger. "So we're doing this differently than those airlines that are looking at the bankruptcy car wash."

JetBlue's model is based on peer-competitive payments and benefits without making employees fight for them. Part of the package is JetBlue's history of job security. "We haven't furloughed anybody when oil went to $147, and we didn't issue pay cuts when the economy was in recession."

Unions and adversarial relations between management and workers is a "model that works for some," says Barger, who grew up in Detroit. Quick to point out that management and unions were equal parts at fault during the auto debacle, Barger has built a company where a handshake replaces a picket line. Or at least it has for 13 years.

Have there been hiccups along the way? Absolutely, and there will be going forward, as well. But if JetBlue has survived terrorists, oil bubbles, and PR nightmares, one gets the sense they have a shot at doing the same over the next 10 years.

Have unions done more harm than good for the airline industry? Let us know your thoughts in the comment section below or visit us on Facebook.

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