JetBlue seen able to recover image, shares rise

By Kyle Peterson and John Crawley

CHICAGO/WASHINGTON, Feb 21 (Reuters) - JetBlue Airways (JBLU.O) can recover its customer-service reputation, airline experts said on Wednesday and investors agreed, sending its stock above pre-storm levels.

JetBlue, normally one of the best U.S. airlines for handling baggage, honoring reservations, and providing extras like in-flight television, stranded hundreds of passengers aboard grounded aircraft and canceled some 1,200 flights after last week's East Coast ice storm.

The carrier is paying out $10 million in refunds to passengers on canceled flights and issuing $16 million worth of vouchers to delayed passengers for future travel and has promised better communications with customers and improved procedures for dealing with delays and other difficulties.

JetBlue apologized Wednesday in full-page newspaper advertisements in big markets, appealing to the flying public to give it another chance. "You deserved better -- a lot better

-- from us last week and we let you down," JetBlue said. -- from us last week and we let you down," JetBlue said.

Its shares ended Wednesday up 2.3 percent to $13.19, above their $12.99 Feb. 13 close, before the ice storm.

Joe Schwieterman, transportation expert at DePaul University, said he thought JetBlue would have to work harder than other airlines in a similar situation because of its reputation for service surpassing other low-cost airlines and less nimble competitors.

Schwieterman expects JetBlue to take a hit on short-term bookings. "They've also lost some of their cachet with the traveling public that will be hard to win back," he said.

But air fare guru Terry Trippler believes the JetBlue fiasco has been overblown and customers will stay loyal. "I think what got them where they are today, customer service, will get them back to where they were," Trippler said.

Airline consultant Robert Mann said the speed of JetBlue's recovery would be determined by the speed of its promised operational changes. "I think their reputation will be irreparably harmed only if they fail to walk the talk."

The airline's base at New York's John F. Kennedy airport can be congested and vulnerable in bad weather. JetBlue ranked 16th of 20 airlines in overall on-time arrival last year at 72.9 percent.

The carrier reported on Wednesday that operations were smooth with flights running at normal capacity and no significant weakness apparent in bookings. JetBlue flew at just under 80 percent capacity in December. "Our customers are still flying," said JetBlue spokesman Sebastian White. He could not provide specific daily load factors or booking information.

There were a handful of minor delays in JetBlue's system on Wednesday caused by gate-related software problem, fog and long security lines, White said.

The carrier said the "worst operational week" in its seven-year history would result in a wider-than-expected loss for the first quarter.