JetBlue Airways Corporation vs American Airlines Group Inc.

JetBlue Airways Corporation vs American Airlines Group Inc.

JetBlue Airways Corporation
JetBlue Airways is an airline American of low cost belonging to the JetBlue Airways Corporation. The company is headquartered in Forest Hills, near the district of Queens in the city of New York. Its main base is located at the John F. Kennedy International Airport .In 2001 , JetBlue began operations at Long Beach Airport in Long Beach, California, and then in the Logan International Airport in Boston, Massachusetts, in 2004 . It also has operations in Fort Lauderdale, Washington-Dulles and the Orlando International Airport. The airline mainly serves destinations in the United States, with flights to the Caribbean, Bahamas, Bermuda, Mexico, Colombia, and Peru and from 25 February 2016 to Ecuador.
David Needleman founded the company in February 1999 under the name "New Air". In September of that same year, the airline you were granted 75 tours in John F. Kennedy International Airport, and the formal authorization of the United States was received in February 2000, beginning operations on 11 February. JetBlue's founders had originally intended to call "taxi" and therefore wear yellow to associate the new airline to the city of New York. The idea was rejected for several reasons: the negative connotation of the taxis of New York; the ambiguity of the word cab with respect to air traffic control; and threats of investor JP Morgan to withdraw $20 million of the $128 total for the initial financing of the airline millions, unless the name is changed. The founders of the airline also considered using as their base of operations to the city of Trenton, New Jersey, but this idea did not prosper. On March 26 of 2009 they announced travel to San Jose the capital of Costa Rica. In mid of 2009, JetBlue began daily flights on the route linking the cities of Orlando (Florida, USA) and Bogota (Colombia).

American Airlines Group Inc.
Founded in 1930, American Airlines, formerly American Airways Inc., was the result of the consolidation of more than 80 small airlines into The Aviation Corporation. American Airways Inc. officially became American Airlines Inc. in 1934, the same year C.R. Smith became president of the company. The airline began trading on the New York Stock Exchange on June 10, 1939. Originally headquartered in New York City, where it continues to maintain a strong presence, American moved its headquarters to Fort Worth, Texas, in 1979. In 1982, a new holding company, AMR Corporation, was formed and became the parent company of American Airlines and American Eagle Inc. The formation of AMR had no effect on the day-to-day operations of American, but it did provide the company with access to sources of financing that otherwise might not be available. For the next three decades, American became one of the largest airlines in the world, contributing nearly $100 billion to U.S. and international economies. It helped create more than 900,000 jobs worldwide and supported approximately 1,400 nonprofit organizations worldwide.
It was formed on December 9, 2013 by the merger of AMR Corporation, the parent company of American Airlines, and US Airways Group, the parent company of US Airways. 3 airlines together form the world's largest airline, with more than 6700 flights day to 336 destinations in 56 countries, about $ 40 billion in revenues, more than 100 000 employees and plans to buy 607 new aircraft, including 517 aircraft single-aisle and 90 wide body aircraft. 4 Integrating American Airlines and US Airways under a single operating certificate is expected to be completed by the end of 2015.
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* American Airlines Group Inc. (2014 – 2013)
Current Ratio
Current Assets / Current Liabilities = Current Ratio * 12,112,000 / 13,435,000 = 0.90
Acid Test Ratio
Cash + Short-Term Investments + Receivables (Net) / Current Liabilities = Acid-Test
Ratio
* 9,848,000 / 13,435,000 = 0.73
Receivables Turnover
Net Credit Sales / Average Net Receivables = Receivables Turnover * 42,650,000 / 1,665,500 = 25.6 times * 365 days / 25.6 = every 14.3 days
Inventory Turnover
Cost of Goods Sold / Average Inventory = Inventory Turnover * 15,620,000 / 1,008,000 = 15. 5 times the inventory is sold during the period. * 365 days / 15.5 = every 23.5 days Inventory turnover ratios vary considerably among industries.

Profit Margin
Net Income / Net Sales = Profit Margin * 2,882,000 / 42,650,000 = 6.8% percentage of each dollar of sales that results in net income.
Asset Turnover
Net Sales / Average Assets = Asset Turnover * 42,650,000 / 43,024,500 = 0.9 times how efficiently a company uses its assets to generate sales.

Return on Assets
Net Income / Average Assets = Return on Assets * 2,882,000 / 43,024,500 = 6.7% an overall measure of profitability.

Return on Common Stockholders’ Equity
Net Income – Preferred Dividends / Average Common Stockholders’ Equity = Return on Common Stockholders’ Equity * 2,882,000 - $0 / 2,376,000 = 12.1 % of net income the company earned for each dollar invested by the owners.
Earnings per Share
Net Income / Weighted Average Common Shares Outstanding = Earnings per Share * 2,882,000,000 / 630,033,000 = 4.57 per share of the net income earned on each share of common stock.
Price Earnings Ratio
Market Price per Share of Stock / Earnings per Share = Price Earnings Ratio * 42.30 / 4.57 = 9.26 times reflects investors’ assessments of a company’s future earnings.
Payout Ratio
Cash Dividends / Net Income = Payout Ratio * (144,000) / 2,882,000 = 5 % of earnings distributed in the form of cash dividends.

Debt to Total Assets Ratio
Total Debt / Total Assets = Debt to Total Assets Ratio * 41,750,000 / 43,771,000 = 95.4 % of the total assets that creditors provide.
Times Interest Earned
Income + before Income Taxes + Interest Expense / Interest Expense = Times Interest Earned. * 2,882,000 + 330,000 + 887,000 / 887,000 = 4.6 Times of the company’s ability to meet interest payments as they come due.

* JetBlue Airways Corporation (2014 - 2013)

Current Ratio
Current Assets / Current Liabilities = Current Ratio * 1,200,000 / 1,936,000 = 0.62
Acid Test Ratio
Cash + Short-Term Investments + Receivables (Net) / Current Liabilities = Acid-Test Ratio * 341,000 + 367,000 + 310,000 / 1,936,000 = 0.53
Receivables Turnover
Net Credit Sales / Average Net Receivables = Receivables Turnover
• 5,817,000/ 310,000 = 18.8 times
• 365 days / 18.8 = every 19.4 days
Inventory Turnover
Cost of Goods Sold / Average Inventory = Inventory Turnover
• 2,775,000 / (46,000 + 48,000) / 2 = 57.04 times the inventory is sold during the period.
• 365 days / 57.04 = 6.4 every days Inventory turnover ratios vary considerably among industries.

Profit Margin
Net Income / Net Sales = Profit Margin
• 401,000 / 5,817,000 = 6.89 % percentage of each dollar of sales that results in net income.
Asset Turnover
Net Sales / Average Assets = Asset Turnover
• 5,817,000 / 7,594,500 = 0.8 times how efficiently a company uses its assets to generate sales.
Return on Assets
Net Income / Average Assets = Return on Assets
• 401,000 / 7,594,500 = 5.3% an overall measure of profitability.

Return on Common Stockholders’ Equity
Net Income – Preferred Dividends / Average Common Stockholders’ Equity = Return on Common Stockholders’ Equity
• 401,000 - $0 / 2,529,000 = 15.9 % of net income the company earned for each dollar invested by the owners.
Earnings per Share
Net Income / Weighted Average Common Shares Outstanding = Earnings per Share
• 401,000 / 315,006,000 = 0.13 per share of the net income earned on each share of common stock.
Price Earnings Ratio
Market Price per Share of Stock / Earnings per Share = Price Earnings Ratio
• 25.85 / 0.13 = 198.84 times reflects investors’ assessments of a company’s future earnings.
Payout Ratio
Cash Dividends / Net Income = Payout Ratio
• 0 / 401,000 = 0 % of earnings distributed in the form of cash dividends.

Debt to Total Assets Ratio
Total Debt / Total Assets = Debt to Total Assets Ratio
• 5,310,000 / 7,839,000 = 67.7 % of the total assets that creditors provide.
Times Interest Earned
Income + before Income Taxes + Interest Expense / Interest Expense = Times Interest Earned.
• 401,000+ 623,000+ 134,000/ 134,000= 8.6 Times of the company’s ability to meet interest payments as they come due.

Company Analysis in terms of Liquidity, Profitability and Solvency.
For the examination of liquidity ratios in the airline business, the results of calculations of selected liquidity ratios for JetBlue Airways Corporation vs American Airlines Group Inc. The analysis of liquidity ratios for selected airlines shows that the values of the current ratio have been less than 1 or slightly above it which indicates that the traditional rule of thumb 2 to 1 for the current ratio is not applicable in the U.S airline industry. By examining average values for the current ratio and the quick ratio calculated for selected carriers, as well as differences between them, we can conclude that U.S airlines, especially American Airlines Group Inc. have mostly invested in highly liquid assets including cash, short-term investments and accounts receivables that can readily be converted to cash but nevertheless JetBlue Airways Corporation It is below.
The values of selected profitability ratios, especially the profit margin and operating profit margin, indicate low profitability in the airline industry due mainly to slow growth in demand for air traffic, increasing operating expenses driven by rising jet fuel expenses and labor costs and the overall economic condition worldwide.

JetBlue Airways Corporation results of debt and coverage ratios which indicate that they have significantly more debt than stockholders’ equity or interest bearing debt and other liabilities account for a major part of airlines’ assets thus putting them at higher long-term solvency risk. The low or negative amounts of airline stockholders’ equity have essentially resulted from accumulated financial losses incurred during years of the economic recession.

Conclusion
It was an interesting and hard work. I learned to see from another point of view the implications and costs of a company. Accounting makes a very important role in any company. Doing this kind of work one can decide as CEO of a company if it needs to improve in some aspect. Having examined the two airline industry the conclusion is that American Airlines Group Inc. is better to invest, than JetBlue Airways Corporation for its liquidity and profitability but it’s a greater risk because American Airlines Group Inc. has more chance to remain stable in the market.