(Reuters) - JetBlue Airways expects its new sleeper seats for U.S. cross-country flights to add to profits even as some analysts question whether it will make a meaningful difference to the bottom line.
Deviating from its all-coach format, JetBlue now offers fully reclining seats on flights between New York and Los Angeles. The service, called Mint, includes some private suites with doors that close, tapas-style food and amenity kits. The seats are located at the front of the plane.
"We think it's going to ramp up pretty quickly to profitability," JetBlue President Robin Hayes said in an interview on Tuesday. "We’re booking weeks out and almost every flight is going out full and we continue to see that trend into the July timeframe."
The Airbus A321 planes with the service have 16 fully lie-flat seats. JetBlue plans the service on flights between New York's John F. Kennedy airport and San Francisco starting Oct. 26.
Hayes said JetBlue could expand Mint to other routes over time.
JetBlue launched Mint in response to customers who said they were skipping the carrier on cross-country flights because it did not offer premium seating. The seats, which recline to convert into flat beds, are initially priced from $599 to $999 one way. Hayes said the average fare was likely to rise but declined to give a timeframe.
The new seats debut as New York-based JetBlue faces pressure to improve revenue and hold down costs. Delta Air Lines and American Airlines Group have also upgraded seating on coast-to-coast routes.
Shares of JetBlue closed up 1.2 percent on Tuesday at $10.98, just below a year high of $11.12 reached on Monday. JetBlue's stock has risen about 28 percent this year, while Delta and low-cost provider Spirit Airlines have seen their shares rise about 46 percent and 39 percent, respectively, year to date.
JetBlue “has a good product, it’s just that in a very price sensitive industry they need to figure out how to monetize it better," said Savanthi Syth, an airline analyst with Raymond James. Syth said she expects Mint to add six or seven cents in earnings per share to JetBlue.
"It’s not big enough to make a big difference to earnings but we think it will be a positive product," she added.
Wolfe Research analyst Hunter Keay said in a May 16 note that Mint could be "earnings negative," since one Mint seat takes up space of three coach seats.
Hayes, who was named JetBlue president late last year, said the carrier was working with Datalex PLC on a new Web-based merchandising platform to be rolled out in the second half that will enable it to offer in-plane products.
"We’ve been making a lot of the investments in the last two to three years that allow us to monetize and develop new products and services for customers which will absolutely grow our ancillary revenue stream," Hayes said.
(Reporting by Karen Jacobs in Atlanta; Editing by Bernard Orr)
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- JetBlue Airways
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