A cultural shift at JetBlue…
A year has passed since JetBlue (JBLU) melted down following an ice-storm that crippled its operations. While the company replaced some top managers, including founder David Neeleman, who still serves as non-executive Chairman, the stock price has yet to recover.
So you can imagine my surprise when I spotted this 8-K from late Friday giving new employment contracts to CEO David Barger, who replaced Neeleman, and Chief Operating Officer Russ Chew. Part of the problem is that the company didn’t include the actual employment agreements in the filing — just a summary. But the other oddity is that Chew, a former FAA official and American Airlines executive, is getting a $12,000 a month housing allowance through the end of 2009, which based on a review of earlier filings, appears to be a first for the 8-year old company. Even in NYC, $12,000 a month still buys you a pretty nice crash pad . To be fair, the company had disclosed that Chew was receiving a housing allowance in this earlier 8-K (as well as a tax gross up to cover the housing), but they never gave a dollar amount for the perk until Friday.
Friday’s filing also substantially increases the salaries for both job titles. When Barger was chief operating officer, he was making $200K a year. His new salary as CEO is $500K, or double what Neeleman was making when he had the same job. And Chew, who replaced Barger as COO, is making $400K plus the housing allowance and gross-up.
The old Jet Blue used to focus on compensating its top executives with lots of options, instead of hefty salaries, which seemed to foster more of a “we’re all in this together” attitude, even among front-line employees. As someone who flies JetBlue pretty regularly, it’s become increasingly clear over the past few months that that culture has clearly changed, and not for the better.
RSS
February 19th, 2008 at 1:14 pm
Seems quite odd that Jet Blue’s solution to problems caused by low-cost operating structures is to raise the salaries of the top executives, who surely have very little to do with what is happening in the terminals and on the planes. They have decided to take stagnant and bloated approach of the other airlines, without apparently understanding why anybody liked them in the first place.
February 21st, 2008 at 2:18 pm
I still prefer to fly JetBlue over other airlines because of the better legroom and DirectTV at every seat. I also find their in-flight cabin crews to be much friendlier and more fun than those at the other airlines. However, I have noticed a disturbing trend in cabin quality. The last few JetBlue flights I took were in planes that needed a cleaning, and quite desparately. They were disgusting.
February 21st, 2008 at 2:27 pm
I prefer to fly JetBlue too and if they flew to either Dallas or Kansas City, where I need to be next month, I probably would have stuck with them. But, like you, I’ve noticed some definite changes. Some of them are downright silly: a few years ago, I still remember how the ground crew in Tampa actually waved goodbye as our plane started backing up. Cheesy? Absolutely. But also kind of sweet, especially for those of us who remember Eastern. Some of the changes are more significant, like on-board bathrooms that don’t seem like they get the same thorough cleaning that they used to. Or, the fact that when you actually need to talk to a live person to change a ticket because the system isn’t letting you do it online, the wait seems unusually long.