JetBlue Improves Market Position With Lufthansa Deal -- And Signals A Trend?

Looks as though JetBlue has made the right move to reverse its flagging fortunes and put itself into a more competitive position for 2008.

The big moving-and-shaking that took place last week, when Deutsche Lufthansa agreed to purchase a 19-percent stake in JetBlue, has had a rejuvenating effect on the struggling low-cost carrier's market values.

The $300 million liquidity injection gives JetBlue some time to complete its turnaround, but the company's long-term strategy is uncertain given limited growth at its home airport, new competition from Virgin America, and the delay in naming a chief financial officer, Bear Stearns analyst Frank Boroch said.

Still, Bear Stearns restored JetBlue's rating to "peer perform" from "underperform," reversing the move it made in October.

The deal also could signal the beginning of a trend away from more generalized alliances toward formalized partnerships, experts suggest. "Frankly, we believe that the general alliance market has reached its sell-by date," says Timothy O'Neil Dunne, managing partner at travel e-business analyst T2Impact. "These tighter relationships will make for better service levels. We predict more of these in the near future."

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