...than 12 years ago, JetBlue has undergone a fundamental shift in its business model to become one of the few carriers to achieve true hybrid status: low fares with frills. It has firmly entrenched itself in luring business travellers through a small corporate sales force and built up its network in Boston to largely cater to the more lucrative corporate traveller. This shift in strategy was primarily undertaken to even out the dramatic peaks and troughs JetBlue experienced with its leisure-focused model, and was also accompanied by a push into Latin American and the Caribbean to introduce markets with a strong base of visiting friends and relatives traffic (VFR) that JetBlue concludes is somewhat recession proof. At the same time, it has aggressively added interline partners that help to boost its passenger numbers and smooth out the revenue troughs it can experience during slow travel periods. But that strategy is not without critics. JetBlue’s growth rates during the last few years have raised eyebrows when most carriers have constantly refined their capacity growth to near zero or have actually shrank their supply. JetBlue counters it is still a young company in growth mode, and it justifies the expansion by pointing to its unit revenue performance. Both passenger unit revenue per available seat mile (PRASM) and yields grew by 10% in 2011, and its 5% to 7% supply growth forecast for this year remains intact after growing 8.6% in 2011. JetBlue estimated share of business...
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...JetBlue Airways: Managing Growth Chathura Wathuge 103739845 75-498-02 Problem Airline industry is a highly unpredictable industry with much complexity. The main problem JetBlue is facing is how to manage its growth with the unpredictable nature of the industry and high expenses in the industry. Another issue is how to handle the complications that arise from the introduction of the new E190 planes. The CEO, David Barger must decide on the best way to slow down the capacity growth of the airlines, so that the company won't grow itself to death. External Environment Industry The airline industry is a part of the overall transportation industry and it encompasses of low-cost carriers (LCC) and legacy carriers. JetBlue mainly compete in the category of low-cost carriers and it conducts both domestic and regional operations. It is a very competitive industry to enter or exit because of the expensive nature of the industry. A firm that tries to enter the industry will have to make substantial capital investments in order to compete in the industry Key Success Factors * Cost leadership - Cost leadership in this industry is vital. By obtaining cost leadership, an airline is able to offer its customers lower rates. * Customer service - Offering an excellent customer service is crucial in the airline industry. This also includes trying to accommodate all customer needs and wants, in relation to his/her travel requirements. * Employee relations - A firm's human...
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...Case Study 1: JetBlue Airways IPO Valuation 08 Fall AFF5300 Case Studies in Finance- March 2013 Executive summary This report examines the decision of JetBlue management to price the initial public offering (IPO) of JetBlue Stock on the April 2002, a few months after the terrorist attack in September, 2001. First, the paper provided a brief introduction to JetBlue Airways and its industry. This paper revealed JetBlue’s innovative strategy and the associated strong financial performance over its initial two year. It followed by, a discussion on the advantages and disadvantages of going public (IPO) for JetBlue. The paper later provided an insight analysis of the company comparison multiples valuations (EBIT and PE multiples valuations) and the discounted cash flows to value JetBlue’s share price. It reached a conclusion that JetBlue Airways IPO should be in a range of $25 to $26 per share. By: Tam Huynh (24675512) Contents 1.0 Introduction 2 2.0 The Airline Industry and JetBlue 2 3.0 JetBlue’s Going Public 2 3.1 The Advantages of going public 3 3.2 The Disadvantage 3 4.0 JetBlue’s Valuation 3 4.1 The comparable Companies Analysis 3 4.1.1 P/E Multiple 3 4.1.2 EBIT Multiple 4 4.2 Discounted Cash Flow Analysis 5 4.2.1 Weighted Average Cost of Capital 5 4.2.2 Discounted Cash Flow Share Price Valuation 5 5.0 Recommendations and Conclusions 5 References 7 1.0 Introduction The terrorist attacks of September 2011 had a severe...
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...HEAVY EDIT JetBlue Airlines: Getting “Blue” again?* JetBlue posted a net income $97 million in 2010. The airline continues to pursue its goal of becoming ―the Americas‘ Favorite Airline‖ and aims attainting positive free cash flow and long term sustainable growth while maintaining adequate liquidity position. Financially, the airline was far better than after the Valentine day fiasco in February 2007 and subsequent loss of $84 million in 2008. It focuses on controlling costs, maximizing unit revenues, managing capital expenditures and aims at achieving disciplined growth (see Exhibit 1).1 However, in the recent years, JetBlue appears to be moving away from its core strategy, in quite interesting ways, of being a low-cost player providing the distinctive ―JetBlue experience.‖ In its efforts to boost revenues, the airline began charging $10 to $20 for seats with extra legroom, doubled its ticket-change fee to $100, and introduced refundable tickets that cost more than nonrefundable ones. Further, the airline began charging $7 for a pillow-and-blanket kit, an amenity usually provided free of charge by other airlines.2 Breaking another low-cost rule, JetBlue moved away from ticket sales through its own Web site and signed up with travel agencies and the Galileo and Sabre global distribution systems in August 2006 and with online travel agencies such as Orbitz in January 2008. Further, it sold approximately 42.6 million shares of common stock to Deutsche Lufthansa, the German...
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...At the beginning of JetBlue, this company had a goal, plan and ideas to how the company would grow into a successful organization throughout the aviation world. With a successful hard work accomplished staff of JetBlue Airways believe that success was within the hard effort of every employee that choose to work for the organization. Rhodes the Executive Vice President for the people had a goal that has a staff of only 10 people that grew 1000. JetBlue Airways wanted to increase the staff to 5000 within 4 years. With successful staff within JetBlue Airways, this company had the opportunity to become an excellent organization for years to come. Ann Rhoades previously worked for Southwest Airlines from 1988 to 1994. With her experience dealing with the excellent customer service, she dedicated her staff to deliver excellent service there was opportunity for JetBlue Airways to strive for success. As an organization JetBlue was has been able to accomplish success because of their innovative ways of handling business, and introducing new method to the airway society. JetBlue was started as a start-up in the early 1999 with a strategy to bring technology throughout many areas of the organization. Introducing technology of the foundation to increasing the overall success of JetBlue as worked well for the founder of JetBlue Airway David Neeleman. JetBlue Airways believe that using paperless technology by substituting computers and aviation information for everything including, airline...
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...JetBlue Airways Corporation (NASDAQ: JBLU) is an American low-cost airline with its main base John F. Kennedy International Airport, also in Queens. In 2001, JetBlue began a focus city operation at Long Beach Airport in Long Beach, California, and another at Boston's Logan International Airport, in 2004. It also has focus city operations at Fort Lauderdale – Hollywood International Airport and Orlando International Airport. The airline mainly serves destinations in the United States, along with flights to the Caribbean, The Bahamas, Bermuda, Colombia, Costa Rica, Dominican Republic, Jamaica, and Mexico. As of November 8, 2010 JetBlue serves 62 destinations in 21 states (including Puerto Rico), and eleven countries in the Caribbean and Latin America.[1] JetBlue also maintains a corporate office in Cottonwood Heights, Utah, a satellite office in Darien, Connecticut, and its Information Technology center in Garden City, New York. JetBlue is a non-union airline. JetBlue was one of only a few U.S. airlines that made a profit during the sharp downturn in airline travel following the September 11, 2001 attacks. Since its IPO on the NASDAQ stock exchange in 2002, JetBlue has become one of the most popular airline stocks in history and currently has about two billion dollars in market capitalization. Financial results were strong for the airline throughout the 2002–2004 years, and many analysts and journalists lauded the airline for its success. As of December 31, 2009 JetBlue Airways...
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...leasing the aircraft verses buying them out right to save on cost. Right now, the level of mergers with airlines have increased due to the operating cost getting so high and to decrease the competition. With merging airlines together this means that many of the cost will have to be shared such as the cost of tickers and baggage fees. Customers can see the difference when they take a flight. There is a cost for everything from headphone to drinks. Airlines are cutting back on meals. Most flights only offer drinks and snacks such as cookies or crackers. “The inculcation of this set of core values within the jetBlue organization is best summarized as delivery of “the jetBlue experience”. The depth of delivery of the jetBlue experience is best measured by the level of customer satisfaction. The J.D. Powers and Associates 2007 North American Airline Satisfaction Study ranks jetBlue the highest airline in customer satisfaction, both among low-cost and traditional carriers. The study ranks, in order of importance: cost and fees; flight crew; in-flight services; aircraft; boarding/deplaning/baggage; and check-in”. Westlake (2007). Discuss Jet Blue's strategic intent prior to 2008. The strategic intent prior to 2008 was to increases the revenue and profits and to make the passengers feel comfortable and important. “Given the stress that came with the 9/11 attacks, Jet Blue’s founder David Nelleman knew that its patrons would be...
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...JetBlue Case Study Just 2 years after its inception in April 2002, JetBlue Airways remained profitable and was growing aggressively despite the terrorist attacks that occurred in September 2001. Together with co-lead manager Morgan Stanley, the JetBlue board was ready to set a price range, which they initially decided should be $22-$24, but facing excess demand, they increased the price range from $25 to $26. However, most of the group anticipated huge demand. In 1999, CEO David Neeleman announced his business plan and was convinced it would be successful on account of his strong commitment to innovation in people, policies, and technology. He attracted David Barger, former VP of Continental Airlines, as JetBlue’s president and COO and John Owen, former VP and treasurer of Southwest Airlines, as JetBlue’s CFO. He had strong support by many, especially the venture-capital community. He swiftly raised $130 million in funding from high profile firms such as Weston Presidio Capital, Chase Capital Partners, and Quantum Industrial Partners. The main problem facing JetBlue managers was the pricing policy. Morgan Stanley reported that the deal involved a severe excess of demand. Given this fact, some thought that the current pricing range was too low and that by raising the price, it would instill confidence into the market. In contrast, some thought raising the price would endanger the success of the deal. Management thought a successful offering involved not only raising short-term...
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...JetBlue Airways: Growing Pains A case report prepared for MG 495 Business Policy Spring II 2014 Paige Pence Jamie Neidholdt Tyler Slayton Ja-ir Gooden Jacob Miller May 4, 2014 JETBLUE AIRWAYS: GROWING PAINS I. Introduction A. Executive Summary 1. Summary statement of the problem: JetBlue Airways was a fairly new airline that was going up against such airlines like Southwest, AirTran, and Delta. Started in 1999, JetBlue Airway was able to turn profits fairly quickly; in 2001 the company had profits of $38.5 million (George & Regani, 2008, 20-4). From there on it seemed that the company would continue to be profitable especially with expansions in the works; moving into areas that competitors ignored, ordering more planes, expanding to the west coast, and building a new terminal at JFK. However, due to various external and internal factors the company once again posted losses in 2005 and 2006. 2. Summary statement of the recommended solution: The problem is that JetBlue is expanding too fast and too soon to keep up. The company needs to slow their growth so that the company can keep up with the pace. Furthermore, the company needs to continue to do what the company does best; superior customer service, low fares, short-to-medium routes instead of offering what the competitors are doing. This is lessening JetBlue’s differentiation from other companies creating just another option for customers. Finally, JetBlue needs to continue to make cuts...
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...OB713: Individual Case Analysis - JetBlue “Bring Humanity back to air travel” was the founding concept for the creation of JetBlue by CEO David Neeleman back in 1999. JetBlue commenced service in February of 2000 and was a success ever since. The company was run by an experienced management team with industry veterans who were able to translate their vision of the company into a reality customers experienced. High quality service, low cost carrier coupled with an efficient organization that operated a low cost structure and invested staff led to one of the most profitable airlines in the US. JetBlue was not just another low fare carrier. One of the main reasons for their success is innovation. Their aircrafts were the first to have live satellite television in every seat, they were the first to install bullet proof cockpit doors and “TrueBlue” was a customer loyalty program that differentiated from all other frequent flier programs. Most importantly, they identified a customer need that was not satisfied by other low cost carriers. Customers wanted a good flying experience, they were clearly unhappy with the airline services at the time when JetBlue was created and as stated in the case study “complaints about airlines were at an eleven year high.” JetBlue CEO David Neeleman saw this gap and made sure that “exemplary customer service” was identified with the airline. This was achieved through its people and technology. JetBlue bypassed external parties and travel...
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...（1）Vision/Mission/Objectives: JetBlue’s “mission of bringing humanity back to air travel” (Jetblue Airways 2006 Annual Report, n.d.) is supported by their core values of safety, caring, integrity, fun, and passion. JetBlue’s vision is to establish itself as the leading U.S. low-fare carrier. Since their first official flight on February 11, 2000, their primary goal has been to grow enough to be successful, but to remain small enough to preserve their original strategic direction. JetBlue’s major goals and objectives are to offer a low fare, low cost passenger airline that provides high quality customer service, and to build an organization where the employees take pride in their company (JetBlue Airways 2006 Annual Report, n.d.). （2）Strategies: Present strategy/strategies Some of JetBlue’s most important strategies are: • Limiting operating costs • Flying with a new Airbus A30 Fleet • Developing a quality brand • Hiring dedicated employees • Pursuing the latest technology Its overall strategy has been to identify routes with high average fares and beat the competition price, as well as to distinguish itself with service offerings such as TV and radio programming. （3）Time-bound: 2. （1）customer segmentation: Major carriers, regional carriers, and low-cost airlines. Currently there are 16 major carriers, the largest of which are American, Continental, Delta, Northwest, Southwest, and United (JetBlue Airways 2006 Annual Report, n.d.). These airlines offer scheduled flights...
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...Professor Samir Moussalli MGMT499 November 18, 2010 Analysis Conducted by PSPS Associates Outline I. Management Summary II. Introduction a. Purpose b. goals III. Background IV. Strategy Formulation a. Vision b. External Opportunities & Threats c. Internal Strengths & Weaknesses d. Long Term Objectives e. Alternative Strategies f. Strategy Selection V. Strategy Implementation a. Annual Objectives b. Policies c. Employee Motivation d. Resource Allocation VI. Strategy Evaluation a. Internal Review b. External Review c. Performance Measurement d. Corrective Action In this analysis of Jet Blue Airlines, we will take an in-depth look at the internal and external factors surrounding the operation and continued success of the airline. We will reveal the opportunities, both internally and externally. As well as expose threats that could potentially...
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...Strategies for Growth and Value Creation Case Analysis: JetBlue – Managing Growth Prepared by, Alexander Martinus Christian (1342980602) Dina Sandri Fani (1342981574) Muhammad Irsan (1340001263) Puntin Kulmongkon (1342980514) BINUS BUSINESS SCHOOL BINUS UNIVERSITY JAKARTA 2015 I. Case Synopsis JetBlue Airways, Inc. (JetBlue) is a low-cost carrier (LCC) that is based in New York’s John F. Kennedy International Airport. The founder, David Neeleman, developed JetBlue’s business plans in 1998, and established the company in February 1999 after raising the needed financial resource to create the airline. JetBlue started its operations in February 2000, with its first flight from JFK to Fort Lauderdale airport in Florida. The September 11, 2001 terrorist attacks caused a very devastating time for the airline industry. Even though this occurred only a year after JetBlue started as a LCC, the company was one of three airlines to produce a profit at the end of 2001. Their performance in this year alone showed many other airlines that JetBlue was a big competitor in the airline industry who couldn’t be ignored. In the following years JetBlue grew substantially as one of best-rated airlines in the industry for customer satisfaction. In May 2007, JetBlue now decides to change its command structure. David Neeleman is being replaced by David Barger, former chief operating officer (COO) and president of the company, as chief executive officer (CEO). After gaining...
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...JetBlue Soars into the Friendly Skies October 18, 2010 Discuss the trends in the U.S airline industry and how these trends might impact a company’s strategy. Despite the unpredictable and rising costs of aircraft fuel, oil and maintenance, threats of terrorism, and fear of decreases in business and leisure travelers, the airline industry has remained resilient in recent years. According to Air Transport Association of America (ATA), (2006), the airline industry lost about 13 billion dollars during the early 1990s, and earned about 23 billion dollars from 1995 until 2000. The industry suffered additional loss of 35 billion dollars from 2001 until 2005 yet, has recently begun to show another wave of growth. Additionally, the September 11 attacks, energy conservation, and the recent economic crisis greatly influenced the airline industry’s ability to affect the long term growth. Increased competition from new low-cost airlines and lack of trained pilots added to the bleak outlook. Charging for baggage, mergers, and elimination of meals are cost-cutting initiatives which drive trends at it relates to airline passengers. The airline industry, among other commerce industries has shown pockets of recovery after some painful years. According to ATA, the industry trade organization for major U.S airlines, this year there were eight months on consecutive revenue growth. Passenger travel skyrocketing to 17 percent in comparison to last year. (Thompson, Strickland, &...
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