JetBlue removes Neeleman as CEO

NEW YORK (Reuters) - JetBlue Airways Corp. JBLU.O removed David Neeleman as chief executive on Thursday, three months after a major service meltdown, putting the 47-year-old founder of the company into the role of nonexecutive chairman.

David Neeleman speaks at the Reuters Aerospace and Defense Summit in Washington December 7, 2006. JetBlue Airways Corp. on Thursday pushed out founder Neeleman as chief executive three months after a service meltdown. REUTERS/Hyungwon Kang

JetBlue said Neeleman, who started the company in 1998, will be replaced as CEO by President Dave Barger, 49, effective immediately.

Neeleman said the new role will free him up to spend more time on strategic issues that had been neglected amid the carrier’s rapid growth.

The change in leadership comes after JetBlue suffered an embarrassing service disruption on February 14 that exposed weaknesses in the No. 8 U.S. carrier’s operations.

A Valentine’s Day ice storm stranded passengers on planes for hours, led to nearly 1,200 flight cancellations over several days, and cost the company more than $30 million.

Signs of trouble were evident last year, when the New York-based airline reined in growth plans and sold some planes after posting losses.

“When you’re a founder and an entrepreneur and you get mired in the operation, it’s not good for anybody,” Neeleman said in an interview.

“This is a much better structure for us going forward,” he said. “That was the board’s recommendation, and I said ‘Great, let’s do it.’”

“The whole thing with Valentine’s Day, it got us all focused back on the operation,” Neeleman said. “It really highlighted that the strategic part is so important.”

The industry pioneer said the new role will give him more time to focus on issues like JetBlue’s Live TV unit, alternative sources of jet fuel, new forms of electronic ticketing, and opportunities afforded by the open skies agreement between the United States and Europe.

Barger, who has worked alongside Neeleman since 1998, said he did not expect significant changes to the company’s strategy.

“We’re situated well now,” he said in an interview.

Before joining JetBlue, Barger spent about six years at Continental Airlines CAL.N, including serving as vice president of the No. 4 U.S. carrier's Newark, New Jersey, hub.

JetBlue shares, which have fallen about 30 percent over the last four months, rose 4.7 percent to $10.89 in early afternoon trading on Nasdaq.

Neeleman, a father of nine, was a successful pioneer in the airline industry, shaking up U.S. air travel. In JetBlue, he created a low-fare carrier that offered customer service perks such as live television and leather seats. The airline took its first flight in 2000.

Before JetBlue, he set up Morris Air and eventually sold it to Southwest Airlines Co. LUV.N.

According to the company’s latest proxy filing with securities regulators in April, Neeleman owned 10.77 million shares of JetBlue, worth about $112 million. That represents about 6 percent of the company’s shares.

In 2006, Neeleman received a salary of $200,000 and a $50,000 incentive award.

JetBlue said the change had been in the works for some time. In March, it hired Russell Chew -- former chief operating officer at the Federal Aviation Administration -- to be its chief operating officer.

“At this point, the company is not so much in need of visionary management as it is operational management,” said airline consultant Robert Mann. “That’s what Dave Barger and Russ Chew bring to the table.”