JetBlue fiasco: $30M price tag

CEO Neeleman pledges reforms, vows to keep job after cancellation leaves passengers stranded; airline back to full schedule.

By Grace Wong, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- JetBlue CEO David Neeleman said Tuesday that the meltdown the airline experienced in the past week could end up costing the company about $30 million - but won't cost him his job.

The carrier said it was flying a full schedule Tuesday after nearly a week of storm-related cancellations to and from New York's John F. Kennedy International Airport and also unveiled a plan aimed at wooing back passengers.

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The $30 million price tag includes about $10 million for refunding tickets for canceled flights, $16 million for issuing travel vouchers and $4 million for incremental costs, such as hiring overtime crews, Neeleman said during a conference call with media.

The cost of refunding tickets for canceled flights will impact results in the current period, but Neeleman said he's more focused on the long term.

"I'm not focused on the first quarter. I'm focused on the second, third and fourth quarter and rebuilding our reputation in the eyes of our customers and crew members," he said.

Shares of Jet Blue (down $0.66 to $12.90, Charts) tumbled 5 percent in midday trading.

Neeleman, the founder of the discount carrier, has come under fire since an ice storm hobbled the airline's hub in New York last Wednesday.

But he said he has no intention of stepping down from his post.

"I'm the founder of the company, I'm the CEO, and I think I'm uniquely qualified to deal with these issues," Neeleman said.

The storm left airlines out on the runway at Kennedy and stranded hundreds of JetBlue passengers on planes for as long as eight hours.

Those delays rippled throughout the airline's operations, resulting in some 1,100 flight cancellations since last Wednesday.

Neeleman called the fallout of the ice storm a "defining moment" for the airline and said the company was implementing new policies and adding management to improve operations.

"We learned a huge lesson. That will never happen at JetBlue again," Neeleman said earlier Tuesday on CNN's American Morning.

In the wake of the cancellations, JetBlue has launched a wide-ranging plan to win customers back to the airline.

Under its "Customer Bill of Rights," passengers impacted by ground delays will receive refunds and credit for future travel.

The value of the reimbursement will depend on the length of their delay and will be applied retroactively to customers impacted in the last week.

JetBlue said it also is implementing a new policy in which it will get passengers off planes left on the runway for more than five hours.

Since Northwest Airlines experienced a similar meltdown in 1999, passenger rights activists have called for industry-wide regulations for dealing with stranded planes.


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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.