The Good Man

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What is the greatest takeaway from this case in terms of strategic management? Getting Over the Jet Blues
David Neeleman is in a good mood. Fresh off a flight from São Paulo and gearing up for a round of TV interviews, Neeleman, 50, agrees to meet over lunch at a Così sandwich outlet in Greenwich, Connecticut, near his home in New Canaan. . . . Neeleman has a happy story to tell: Investment firm TPG has just bought a $30 million stake in his Brazilian airline Azul Linhas Aéreas Brasileiras, and Azul has set an industry record, carrying 2.2 million customers in its first year. Azul’s early success is all the more sweet for Neeleman given the bitterness he felt after his ouster from JetBlue Airways. . . . After dabbling with the idea of starting an ethanol company in California, Neeleman went to check out a Brazilian airline called BRA Transportes Aéros as a favor to some investor friends. “It was the furthest thing from an airline I’ve ever seen,” says Neeleman. “I thought, ‘If these guys will invest $150 million in this, it must be worth look- ing around.’” (BRA suspended operations in late 2007.) Neeleman quickly raised $150 million to launch his own start-up airline. Then, just as he was finalizing route plans and securing government clear- ance to fly, the global economy crashed. With its financing and plane orders locked in, he pushed ahead with his launch in December 2008. Remarkably, Azul—“blue” in Portuguese—is on track to make a profit on 2010. Neeleman, the chairman, owns about 15% and controls the voting shares. Azul’s long-term success will depend in part on how well Neeleman has learned from his mistakes. One challenge, says Vaughn Cordle, managing partner of Washington-based research firm Airline- Forecasts, will be curbing his ambition. “The greatest threat is if they let Azul grow above a sustainable rate,” says Cordle. “That’s what happened at JetBlue.” Neeleman acknowledges the Brazilian market’s many challenges, from taxes to...
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