"Neeleman's talents took flight with JetBlue"

Sunday, May 21, 2006

Neeleman's talents took flight with JetBlue
By Dan Fitzpatrick
The Pittsburgh (PA) Post-Gazette


JetBlue Airways founder David Neeleman never excelled at school or sports,
and he remembers painfully the self-doubts that plagued him as a teenager,
when he lacked the patience to read an entire book or write adequately. "It
really didn't feel like I was going anywhere," he said.

It took a late-teens journey through the slums of Brazil to turn Neeleman's
life around and set the impatient, easily distracted college dropout on a
course to create Jet-Blue, based in Forest Hills, N.Y., the best-financed
startup airline of the deregulated era.

Neeleman's evolution from bored, uninspired student to restless airline
entrepreneur is a story of several failures, how he recovered from them and
his ability to turn potential weaknesses into strengths.

Many of JetBlue's best-known features - its knack for customer service, for
salesmanship, for equal treatment of all passengers, for a pledge to "bring
humanity back to air travel" - can be traced to Neeleman's South American
pilgrimage and the lessons he learned about himself along the way.

Six years after JetBlue's launch, Neeleman is now a messianic figure in the
hypercompetitive, cutthroat airline industry, the latest in a lineage of
colorful, oddball leaders that includes chain-smoking, whiskey-swilling
Southwest Airlines founder Herb Kelleher and millionaire playboy Richard
Branson, founder of Virgin Atlantic.

The key difference, perhaps, is Neeleman's strict religious principles - he
is a seventh-generation Mormon and father of nine known for his
Sunday-night-dinner conversations with friends about faith and family. And
he spends much of the time attempting to recruit converts in his Wall
Street-laden suburban Connecticut neighborhood, where he is a ward mission
leader.

"Think of Richard Branson who doesn't carouse and doesn't drink and you have
Dave Neeleman," said well-known airline consultant Darryl Jenkins, a fellow
member of The Church of Jesus Christ of Latter-day Saints who knows
Neeleman. Airbus Chief Operating Officer John Leahy, calling from the
airplane manufacturer's offices in Paris, described Neeleman as "Herb
(Kelleher) without the Wild Turkey and the cigarettes."

Like both Branson and Kelleher, Neeleman is popular with employees and
passengers. He rides his planes at least once a week, announces himself over
the intercom, walks up and down the aisles with snacks and takes suggestions
from passengers (often jotting them down on a napkin).

He joins in the cleaning of the aircraft. He pals around with the baggage
handlers.

Diagnosed with attention deficit disorder, which explains his teenage
aversion to reading and writing, Neeleman refuses to take medication, afraid
it will dull his creativity.

During a brief stint with Southwest Airlines in 1994, Neeleman's disregard
for corporate protocol offended many at the Dallas-based discount giant. In
meetings, according to Barbara Peterson's book "Blue Streak," he would
scribble in his notebook, over and over, "DSAW," short for "Don't Say A
Word."

But many others in the industry remain charmed by his restless energy -
Neeleman claims his disorder allows him to focus almost exclusively on a
single goal, the success of JetBlue. Mike Chen, head of North American sales
and marketing for GE Commercial Aviation Services, still recalls a meeting
where the JetBlue CEO climbed atop a conference table at the GE unit's
headquarters to show his excitement about the new airline.

"Very amusing," said Chen, a neighbor of Neeleman's in suburban Connecticut.

Neeleman's boyish impatience and sincerity can be awkward sometimes,
concedes Barbara Peterson, the author who spent years chronicling JetBlue's
rise. But he is also "the kind of person who can really mesmerize a crowd
when he is really on."

Behind Neeleman's cult of personality is an airline that so far has defied
the track record of countless airline startup failures since Congress
deregulated the industry in 1978. Profitable for its first four years - it
lost $20 million last year due to the rising cost of jet fuel - it is now
the country's 10th-largest carrier, in terms of traffic, and by the end of
2010, plans to climb to 30,000 workers, from 10,000 currently, and to 275
planes, from 99. The company consistently ranks among the industry's best in
customer satisfaction, with live TVs at every seat, fashionably dressed
flight attendants, pizza during long layovers at the airport and a policy
never to overbook - that is, sell more tickets than seats.

Still, while JetBlue has been an unprecedented success for a startup, "I
think (Neeleman's) keenly aware of how easy it is to stumble in this
business," Peterson said. Even today, living in an 8,000-square-foot home in
suburban Connecticut and atop an airline with more than $1 billion in
revenue, he knows that his competitors - especially the major airlines hurt
by JetBlue incursions in the East - are waiting for him to slip up.

Some analysts already are warning that JetBlue's hot streak may be over. Its
on-time performance is down, its costs are up and it is taking on a new type
of plane, the 100-seat Embraer 190, which will complicate everything from
main- tenance to training and move the company away from the simple model
that got it started.

Neeleman has heard the warnings - and dismisses them. He insists that
JetBlue will not be another People Express, a hot start-up in the 1980s that
generated a lot of buzz but lasted only six years. Still, "If you are in the
airline business and you don't have a fear of failure," said Neeleman, 46,
"you are in La-La land."

Born in Sao Paulo, Brazil, to a father stationed there as a UPI
correspondent, Neeleman was 19 when he found his way back to the country of
his birth on a missionary assignment for the LDS Church. It was a trip that
would change his life.

Finding the discipline he lacked in school, Neeleman learned to speak fluent
Portuguese, visited poor villages without running water or electricity and
converted more than 200 people to the Mormon faith in two years - well above
normal recruiting levels for a person his age. The church made him assistant
to the head of Mormon missions for that country, helping direct the
activities of 100 volunteers.

"That was really the first time in my life I had excelled at anything,"
Neeleman said in a telephone interview from his Forest Hills office.

When he came home, he said he knew: "I can succeed at something."

Others saw that salesmanship in him earlier. At 9, he stood on a crate to
work the register at his grandfather's Salt Lake grocery store,
demonstrating an ease with both numbers and people.

One customer-service lesson learned at the grocery store would come in handy
later - customers were happy to pay when they received exactly what they
wanted.

Later, at the University of Utah, Neeleman started a travel agency that
packaged cheap trips to Hawaii, a venture that pulled in as much as $1,000 a
day. He dropped out his junior year to run it full time. He had $150,000 in
the bank.

But that all disappeared in 1983 when the airline supplying his seats went
under, forcing him to file for bankruptcy. It was Neeleman's first business
failure, and he took it hard, later saying he was "devastated." Married with
two children, he returned to his grandfather's Salt Lake grocery store, once
again working the register and stocking the shelves.

But Neeleman bounced back from failure in a big way. His uncle hooked him up
with June Morris, the owner of the largest travel agency in Utah, and
Neeleman built Morris Air into a 22-plane regional carrier that Southwest
Airlines purchased for $129 million in 1993.

Neeleman, at 34, cleared at least $20 million in the deal, and landed a job
with his idol, Kelleher. Neeleman had modeled many of Morris Air's policies
after the Dallas carrier, including plastic boarding passes, no meals and
quick turnarounds at the gate.

That job at Southwest lasted only five months, however. Kelleher fired the
mercurial Neeleman after employees complained about his outbursts.

He had about $25 million at the time, but he found himself moping around
Salt Lake City, unsure of what to do next and hampered by a five-year
noncompete clause he signed with Kelleher, which made it impossible for him
to get back into the airline business right away. He told author Barbara
Peterson that he cried after receiving the news.

Neeleman kept himself busy after Southwest - advising a Canadian discount
carrier, West Jet, and running a reservation company that he eventually sold
to Hewlett-Packard - but all along he knew he had to take off again with an
airline of his own once the noncompete clause expired.

His new concept was simple: a discount airline with frills. First, though,
he knew he needed to raise a lot of money. The man who once told a
journalist that "people who invest in aviation are the biggest suckers in
the world" put in $5 million of his own money and persuaded others,
including international financier George Soros, to contribute a total of
$128 million - the most ever raised by a startup in the deregulated era.

Passengers took to the oddball, underdog ethos of JetBlue, which launched in
early 2000. The airline was profitable by its third full quarter and went
public in 2002, taking advantage of the many problems experienced by
higher-cost competitors, such as US Airways.

Attached Photo:

David Neeleman's career is a story of failures, recoveries and successes.

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