JetBlue Will Be Charging for Checked Luggage

JetBlue Airways Corporation (NASDAQ:JBLU) announced that it would charge the first checked bag for certain customers starting in the first half of 2015 as part of its long-term plan to drive shareholder returns.

JetBlue Airways

During a presentation to investors today, JetBlue Airways Corporation (NASDAQ:JBLU) introduced its three new fare families, which include a discount class that does not offer a free checked bag.

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The airline operator said it would also increase the number of seats on its Airbus A320 fleet by using lighter and more comfortable seats. JetBlue Airway will start retrofitting its Airbus A320 planes in the middle of 2016.

JetBlue Airways also plans to continue rolling out additional Mint service in JFK-LAX route in the fourth quarter and JFF-SFO route in the first quarter of 2015.

The airline operator estimated that its initiatives would be able to collectively generate more than $400 million in annual operating income on a run rate basis starting in 2017.

JetBlue Airways to maintain competitive cost position

JetBlue Airways Corporation (NASDAQ:JBLU) emphasized that it is committed in maintaining its competitive cost position. The airline operator aims to keep its unit cost (excluding fuel and profit sharing) growth below 2% until 2017 with longer-term gains through its initiatives.

In a statement, Robin Hayes, president of JetBlue Airways said, “We believe the plan laid out today benefits our three key stakeholders. It delivers improved, sustainable profitability for our investors, the best travel experience for our customers and ensures a strong, healthy company for our crewmembers.”

JetBlue CFO Mark Powers added, “As we execute this plan and continue to grow, we also seek to drive significantly improved returns for our shareholders. We believe our strategy, in combination with the additional initiatives discussed today, keep us on a path to enhance long-term shareholder value.”

Close financial gap with peers

Commenting on JetBlue’s action, Jim Corridore, an analyst at S&P Capital IQ said, “This was something that the carrier needed to do to be more competitive, and to close the financial gap with its peers.”

JetBlue Airways Corporation (NASDAQ:JBLU) also announced that it will postpone the first deliveries of 18 Airbus planes to reduce capital expenditures by more than $900 million until 2017.  The delay would also allow the company to optimize its fleet to match capacity with demand.

The stock price of JetBlue Aiways rose more than 4% to $13.31 per around 2:43 in the afternoon in New York.