UPDATE 1-JetBlue Airways elects Peterson as chairman

(Adds background on previous chairman)

NEW YORK, May 21 (Reuters) - Low-cost airline JetBlue Airways Corp (JBLU.O: Quote, Profile, Research, Stock Buzz) said on Wednesday it elected Joel Peterson as chairman of the board.

Peterson has served as vice chairman since June 2007 and is the founding partner of Peterson Partners, LLP, a private equity firm.

JetBlue said last month that its founder and former chairman, David Neeleman, would not stand for reelection.

Neeleman, who founded JetBlue in 1998, recently announced plans to start a new airline based in Sao Paulo, Brazil.

Neeleman stepped down as JetBlue's chief executive in May 2007, taking on the role of nonexecutive chairman a few months after the airline miscalculated the effect of an ice storm in New York and had to cancel almost 1,200 flights, stranding thousands of passengers.

Neeleman was replaced as chief executive by former company president Dave Barger.