JetBlue founder: Storm cost CEO job
Neeleman admits to being upset with being forced out of CEO spot following service problems that followed February ice storm.
NEW YORK (CNNMoney.com) -- JetBlue Airways founder and Chairman David Neeleman admitted Tuesday that he wasn't pleased when his company's board forced him to give up the CEO spot in May, and said he believes he'd still have the job if not for the ice storm and service meltdown that hit the airline in February.
"Obviously, when you found a company, and you're the visionary and you start it from Day 1, no one really wants to give up the reins," he told CNNMoney.com following an appearance at the Fortune Leadership Forum. Fortune magazine is a partner in the CNNMoney.com Web site.
JetBlue (Charts) never disguised the fact that Neeleman was asked to give up his CEO spot, although both the company and Neeleman tried to make it seem as far more a mutual decision the day it was announced.
"When you're a founder and an entrepreneur and you get mired in the operation, it's not good for anybody," he told Reuters news agency that day. "This is a much better structure for us going forward. That was the board's recommendation, and I said 'Great, let's do it'."
In Tuesday's interview, he called the decision to remove him from the CEO job as "abrupt" and "a traumatic thing for a company." And he said that he believes the airline's well-publicized service problems related to the ice storm in February were what cost him the job he would like to still have.
"That's a difficult question to answer, but I think probably," he said. "It's tough to put Humpty Dumpty back on the wall and say what would have happened if it hadn't been broken."
Still, he also believes the board was interested in making a change sooner or later, and that the ice storm problems probably only accelerated what would have happened.
Neeleman insists he's now comfortable in his new role and with the management team now in place.
Dave Barger, who had been president of the upstart discount airline since its early days in 1998, long before its first flight, is the new CEO. Russell Chew, a former Federal Aviation Administration executive who Neeleman said he recruited in the aftermath of the February service problems, is the new chief operating officer.
"I'm there (at the company's offices) a lot. Our management team and our leadership want me to be," he said. "I'm the largest non-institutional shareholder. It's my great desire for the company to succeed."
Neeleman has trimmed his holdings in JetBlue since his departure, though. Filings with Securities and Exchange Commission show that he sold 2.5 million shares of the stock, or 23 percent of his holdings, on May 29, for $10.87 a share.
"It's something I should have done a long time ago," he said, saying too much of his net worth was tied up in the company's holdings, and that he had margin loans against those holdings that he was able to eliminate with the sale.
Neeleman said he's donated his salary since founding JetBlue to a fund to help employees who have serious financial setbacks such as illness or deaths in the family.
Shares of the company were slightly higher than his sales price in trading Tuesday, although they were well below the 52-week high of $17.02 hit early this year - before the ice storm.
Still, despite the decline in stock price, Neeleman said he never sensed that it was large shareholders putting pressure on the board to remove him. Over the last six months, JetBlue shares have trailed rivals Southwest Airlines (Charts, Fortune 500), American Airlines parent AMR (Charts, Fortune 500) and United Airlines parent UAL (Charts, Fortune 500), although it is roughly on par with Continental Airlines (Charts, Fortune 500) and ahead of US Airways Group (Charts, Fortune 500).
At a forum that was part of the Fortune conference at New York's Time Warner Center, Neeleman said one regret he had about the way he handled problems associated with the February ice storm had to do with not keeping the board more in the loop on the problems and the decision-making process.
"One problem with independent, outside directors is they are looking through knotholes at the company," he said. "They don't necessarily get a full dose of what's going on."
As far as his communication with the board, or lack there of, he told the forum one director told him, "'You were an extraordinary CEO, you were a lousy chairman of the board.' I guess I'll take any time."
JetBlue's operations problems became apparent after an ice storm on Feb. 14 that hit the airline's hub at John F. Kennedy International Airport in New York.
The carrier had numerous planes packed with passengers heading out on holiday vacations that were trapped on the tarmac at JFK for eight or more hours, some of them which were never able to leave.
It took the better part of a week for the airline to resume its normal operations. It also led Neeleman to apologize publicly for the problems. He also introduced a so-called "passenger's bill of rights," promising vouchers for future travel based on the length of a delay, along with the right to get off any aircraft that has been grounded for five or more hours.
JetBlue customers generally gave the airline high marks for Neeleman's response to the service meltdown. Consumer Reports' National Research Center survey this year ranked JetBlue as No. 1 in customer satisfaction with a score of 87 out of a possible 100, beating out rivals overall in terms of check-in ease, seating comfort, on-time performance and in-flight service.