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Wed, Jan 18, 2012

JetBlue CEO Comments On AMR Bankruptcy

Says Of Consolidation, Higher Fares, 'Why Not?'

In an interview on Bloomberg TV Monday, JetBlue Airways CEO David Barger was asked about the bankruptcy of AMR, the parent company of American Airlines and American Eagle. He explained how the process will be good for American and for the industry, but his comments on why it's good for consumers may be a tough sell.

Regarding what could be a developing bidding war for AMR with suitors including Delta and US Airways, Barger said his company will stay out of that fray, maintaining its core philosophy of growing organically, rather than through mergers and acquisitions. But he praised American and said that, despite the bankruptcy, it represents a "great brand, been around for decades, a lot of strategy in terms of that network, and the process is tough but obviously it's going to be good for that brand in the long run."

Regarding the effect on consumers of industry consolidation, fewer players, reduced capacity and higher prices, Barger noted that, adjusted for inflation, airline prices actually dropped 20 percent from 2000 to 2010. (He didn't say whether that accounts for all the new a la carte fees.) Barger said passengers need to be educated on costs, including the 30-40 percent represented by fuel, and that higher fares might be just the way to do it.

"I think fares going higher, consumers sharing in the cost of energy, that’s not a bad thing. They’re seeing it at the pumps, why not with the aviation tickets?"

FMI: www.jetblue.com

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