JetBlue weighs sale of LiveTV

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JetBlue weighs sale of LiveTV

by Marusca Niccolini

Budget airline JetBlue Airways Corp. hired a financial adviser to explore strategic alternatives for LiveTV LLC, its in-flight entertainment subsidiary, the company announced in its earnings statement Wednesday, April 23.

JetBlue purchased the Melbourne, Fla., company for $81 million in 2002 in a transaction that included $41 million in cash and the assumption of $40 million of LiveTV debt.

LiveTV provides airline passengers with in-flight satellite television and radio. It was founded in 1997 as a joint venture between aerospace firm Thales Avionics and communications equipment maker Harris Corp. LiveTV has since expanded its technology and hardware offerings, including 12 additional channels of in-flight TV programming.

The announcement comes during a troubling time for airlines, as skyrocketing fuel prices have crimped already narrow profit margins. Yet JetBlue's first-quarter losses were narrower than expected, as a 34% increase in operating revenue helped offset the impact of higher fuel expenses. The company said it lost $8 million in the first three months of 2008, significantly less than its $22 million loss for the same quarter of last year.

JetBlue CEO Dave Barger said he was pleased with the company's "strong unit revenue performance and cost discipline during the quarter," but added that "JetBlue is not immune to the unprecedented rise in fuel prices, and we are taking steps to respond to this environment." The divesiture of LiveTV is just one path JetBlue is considering to raise cash. It also said it expects to generate more than $20 million this year in new revenue by charging passengers $20 to check a second bag.

Last month, the airline said it would charge passengers an extra $10 to $20 for additional legroom in certain rows of each plane.

Barger has made an emphasis of consolidating growth.

"We have further reduced our 2008 capacity growth to 3% to 5% by aggressively managing our flight schedule after the peak summer travel period, and we intend to make further adjustments to our network as necessary. We will also continue our focus on cost discipline and revenue enhancements," he said.

Calls to LiveTV were not returned. JetBlue said that the strategic alternatives will be disclosed in the next several quarters, as well as whether it is exploring a sale.

Edited April 30, 2008 by snowman