May 10 (Bloomberg) -- JetBlue Airways Corp.'s board replaced founder David Neeleman as chief executive officer, three months after the airline canceled almost 1,700 flights and stranded more than 130,000 passengers because of winter storms.

President David Barger, 49, will become CEO, and Neeleman, JetBlue's largest individual investor, will be non-executive chairman. ``I'm not a day-to-day operator,'' Neeleman, 47, said today in an interview. ``It's not something I enjoyed.''

Neeleman's exit extends the management and financial upheaval at New York-based JetBlue, which posted a $22 million first-quarter loss on storm-related flight disruptions and payments to travelers. Shares of the low-cost carrier plunged 20 percent after the Feb. 14 storm before today.

``Barger is a real operations guy,'' said Ray Neidl, a Calyon Securities USA Inc. analyst in New York. ``The airline has reached a certain size where visionaries are being pushed aside and the hard-core operations guys are taking over.''

JetBlue's board made the change after the carrier's annual shareholders meeting yesterday. The move followed two straight years of losses at JetBlue, winter operating problems that cost the carrier $41 million, a reshuffling of lower management and ongoing software problems with its Embraer E190 regional jets.

`A Lot of Sense'

``To the credit of our board, they made this suggestion,'' Neeleman said. ``The way it was presented, it made a lot of sense.''

Shares of JetBlue rose 49 cents, or 4.7 percent, to $10.89 at 4 p.m. New York time in Nasdaq Stock Market composite trading.

Standard & Poor's Ratings Services put most of its ratings on JetBlue's debt on CreditWatch with negative implications, saying Neeleman's departure could hurt the airline's ``generally positive employee relations and could result in changes in its business model.''

Barger joined JetBlue as president and chief operating officer in 1998, the year it was founded, and helped build the carrier into the eighth-largest U.S. airline by traffic. ``Where we are in our life cycle, this is so natural,'' he said of today's transition, adding that he plans no immediate changes.

``We've got a tremendous amount of confidence in Dave Barger and his ability to lead the firm,'' said Connor Browne, managing director at Thornburg Investment Management Inc., JetBlue's second-largest shareholder. Thornburg held 17.8 million shares, a 10 percent stake, as of Dec. 31 and added 7 million shares in the December filing period.

``There have been a lot of changes in the executive suite, and we think all of them are for the positive,'' Browne said. He declined to say whether Thornburg had approached JetBlue's board about a new CEO. JetBlue's directors didn't return calls seeking comment or declined to comment on the board's action.

Leadership Changes

Barger ceded his COO title in March when JetBlue picked ex- Federal Aviation Administration official Russ Chew to be chief operating officer. Since then, JetBlue also has named a chief for its John F. Kennedy International Airport hub and added a former United Parcel Service Inc. executive to its board.

Neeleman's departure is ``surprising, but probably the right move,'' said Jim Corridore, a Standard & Poor's analyst. ``Neeleman led JetBlue as one of the fastest-growing and largest airlines, but we believe recent problems showed a lack of operational expertise.''

JetBlue needed six days to recover from a Feb. 14 ice storm that paralyzed JFK, grounding aircraft across its network and leaving travelers marooned on planes and in terminals for as long as 10 hours. With many jets and crews stuck in the wrong cities, JetBlue scrapped a third of its flights over six days.

The meltdown was worsened by JetBlue's use of part-time, home-based reservation agents, a shortage of airport personnel who could assist fliers, and a lack of airport computer kiosks to allow passengers to seek refunds or rebook travel themselves.

Apology

Neeleman apologized, and JetBlue crafted a passenger bill of rights, created a plan to improve airport operations and beefed up its airport and reservation staffs.

``The ice storm sped things up and focused us on more long-term things,'' Neeleman said today. He had said immediately after the storms that he wouldn't step down.

Barger said Neeleman will have a ``full-time job'' dealing with network planning, the future of JetBlue's LiveTV subsidiary and negotiating with international carriers under the new Open Skies agreement between the U.S. and European Union.

Before coming to JetBlue, Barger was with Continental Airlines Inc. for 10 years in a variety of management positions, including vice president of the Houston-based carrier's Newark, New Jersey, hub. He also previously worked at New York Air.

`Solid'

``Our model is solid, our business plan is solid,'' Barger said. ``It's so important that David continues along the lines of what he's been doing so well'' in building a personal tie between JetBlue and its passengers and employees.

Neeleman was the longest-tenured CEO among the eight largest U.S. carriers, many of which changed leaders during the industry slump that followed the September 2001 terrorist attacks.

He created JetBlue in 1998 with $130 million from investors including Soros Private Equity Partners. Neeleman earlier founded low-fare Canadian airline WestJet Airlines Ltd. and was president of Morris Air Corp., which was acquired by Southwest Airlines Co., from 1988 to 1994.

Neeleman used luxury features including leather seats and personal televisions to lure travelers when JetBlue began flying in 2000. JetBlue sold shares to the public in April 2002, and the stock reached an all-time high of $31.23 on Oct. 9, 2003. Before today, the shares had slid 67 percent from their peak.

Starting Versus Running

``He has been extraordinary in starting very successful airlines,'' said Julius Maldutis, president of airline consulting firm Aviation Dynamics Inc. and a JetBlue investor. ``It appears he was not very good at running them.''

The carrier's operational and financial difficulties predated the Feb. 14 storm.

JetBlue twice trimmed growth plans last year, including delaying by four years the planned addition of 44 aircraft, after operating costs climbed. JetBlue also sold five Airbus SAS A320 jets and has said it may sell more planes this year.

Then, as JetBlue revamped operations in March after the storm, it began parking its 100-seat Embraer E190 jets two at a time to fix software glitches that have reduced the planes' reliability. JetBlue flies the 25 E190s in markets too small for the 150-seat A320s.

JetBlue's 3.75 percent note due in March 2035 rose 1.75 cents to 97.25 cents on the dollar, yielding 3.91 percent, according to Trace, the bond-price reporting service of the NASD.

Credit-default swap contracts based on $10 million of JetBlue bonds fell 0.9 percent to $535,800, according to CMA Datavision in London. The contracts are designed to protect bondholders against default. A decline in the price indicates a rise in the perception of a company's credit quality.

To contact the reporters on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net; David Mildenberg in Atlanta at dmildenberg@bloomberg.net

Last Updated: May 10, 2007 16:08 EDT