...1. David Neeleman's original strategic mission and vision is just simple, to bring humanity back to air travel. The reason why the company offers strategic and innovative services to its customers like offering wholesome entertainment, food and drinks on flight is to attract more travellers through its affordable airline passes. The company is simply customer-centric such that its first priority is the comfort and fun for its clients. Aside from that, Jet Blue Airways Corporation also reaches out to the public by being active into community service. Essentially, Jet Blue is committed to enriching the lives of children and supporting the communities they serve through their core values of caring, fun and passion. In connection, one of the best community services offered by the company is giving books to children of not wealthy parents in one of the cities in the United States. The unwritten mission statement of Jet Blue Airways Corporation is reflected in its core values and principles created and set by the company. In lieu of mission statement, Jet Blue Airways Corporation is presenting a strategic set of core values. These core values include safety, caring attitude, integrity, fun and passion. The company commits to safety as the first priority in all business operations. In order to do so, the company adheres to rules and regulations implemented by regulatory agencies whenever is needed. Maintaining high standards in a consistent manner is the primary goal of the company...
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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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...Case Study JET BLUE 1) Jet Blue, with the motto of Happy Jetting not only fulfills the customers satisfaction rate, it sets the bar high. What do customers want when they fly abroad to another country or from one place to another? Cheap prices, comfortability, and a good service. With todays economy these are hard to offer in the market unless you are willing to pay the price. This is where Jet Blue plays the role. Jet Blues fuel efficient jets allow lower fuel costs which saves the customers pocket, good news for everyone. These small jets do not only consume less fuel, they also come with an extra 3 inches of legroom which can be very confortable for bigger customers or for long flights. Customers flying usually get hungry thousands of feet about the ground, that is where Jet Blues quality service comes in. They offer quality beverages and snacks with a variety of choices for completely free of charge, which most airlines lack. Along with comfortable leather seats and extra leg room there are entertainment systems with various channels, and satellite television for each person, along with free wi-fi service for people with smarth phones and laptops. 2) When a customer buys a Jet Blue flight they are up for a treat. Low fare prices are the first thing one notices with Jet Blue. Not to be confused with cheap, low quality flights where you might think you are flying as a hostage without food and space. Customers that know Jet Blue are aware that it is the complete opposite...
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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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...Case Outline of JetBlue Airways Corporation I. Problem: The main problem facing JetBlue Airways Corporation is: how to maintain low-costs structure and continue enlarging its market share in the competitive airline industry with increasing fuel costs. II. Strategic Considerations A. Industry Analysis 1. History a). American aviation pioneers attempted to start airlines using airships in the mid-19th industry. b). Aktiengesellschaft was world’s first airline which was founded in November 16, 1909 with the government assistance, and operated airships manufactured by Zeppelin Corporation. c). Tony Jannus conducted the United States’ first scheduled commercial flight on January 1914. d). In 1918, the United States Postal Service won the financial support from Congress to begin air mail service. e). In 1925, Stout Aircraft Company began to construct Ford Trimotor with 12-passenger capacity which became the first successful American airliner. f). At the same time, Pan American World Airways created an air network that linked America to the world. g). At the end of twenty century, a new style of cost airline appeared, offering a no-frills product at a lower price. The representative low-cost carriers are Southwest Airlines, JetBlue and AirTran Airways. h). The September 11th terrorist attacks resulted the airline industry bailout which lost $30 billion with 100,000...
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...Performance Jetblue performance since 2000-2004 had a rapid growth in profit. (Exhibit ROI). Mission, starategy and goals . Mission – Providing a customer with low cost flights with better customer experience, with upgraded planes, safety and reliability. Focus on undeserved markets (regional flights). Strategy. One of the competitive advantage is low cost comparing to legacy competitors, comfort features, no flight cancellations (in the first place), long-haul flights, point to point flights, (instead of using the old and common structure of hub-and-spoke), offering incentives for customers who choose to be technology savvy, saving costs from hiring part-time employees who worked from home, connecting larger cities with medium size cities, entering regional markets with new planes (E190). JetBlue´s business-level strategy is a mix of cost-leadership and product differentiation Resources involved in value chain Technology: new models of planes (fuel efficient) , TV screens for each seat, paperless technology (online purchases), 1 supplier who could easily adjust to preferences of Jetblue. Product Design. New airplanes were designed according to the company’s mission and goals. Manufacturing: 1 supplier, 2 different types of planes with different characteristics and capacities, Prices: up to 65% lower than legacy airlines Marketing: 2 types of customers: business and travel passengers, different customer approach. Distribution: Started with New York and...
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...Vladimir Alicea Cestero (M00338255) COMU 2001 Prof. Joselyn M. Ortiz Pimentel December 15, 2015 Case 4: JetBlue Airways Regaining Altitude Questions 1. How could’ve JetBlue have better Communicated with its internal stakeholders across the country on Valentine’s Day and during the days that followed to enhance its image with customers? In order to maintain their previews image, JetBlue should’ve better assessed their internal communications. JetBlue had at their disposal employees who were willing to help in the crisis, but since they failed due to their lack of preparation and communication. In regards to their clients they should’ve better managed their website communications so that customers could visit and have updated information on their flight status and company’s current status. JetBlue executives should’ve had better communication with its share holders by giving them an update on the situation, with this they would’ve maintained confidence that the company was making the necessary arrangements and reorganization to solve the issue at hand. Most importantly they failed in maintaining control on the situation due to their lack of emergency strategies in assessing and responding in such events. 2. Should the corporate communication team at JetBlue have arranged for CEO David Neeleman to appear on the national television news and talk show circuit following the crisis? What might be the potential benefits and risks to the company’s reputation? Yes, the corporate...
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...1. What were the key elements of JetBlue’s strategy in 2008? • JetBlue Airways chief operating officer (COO) Russell Chew developed the new business strategy in 2008. Following are the key elements of new strategy. • Reevaluate the ways the company was using its assets. • Reduce capacity and cut cost. • Raise fares and grow in select markets. • Offer improved services for corporations and business travelers. • Form strategic partnership. • Increase ancillary revenues. The key elements of this new strategy were saving companies money, generate revenues, and improve operating performance of the company. 2. How has the company chosen to attract customers in sufficient volume to earn profits? JetBlue Company has chosen some effective moves to attract customers in sufficient volume to earn profit. Following are some steps taken by the JetBlue Company. • JetBlue airways stop serving meals during the flight, this way they don’t need to wait for catering service and it helped them to turnaround their time ranged from 20 to 30 minutes. • JetBlue was one of the first companies to use information technology to keep their cost down. • JetBlue developed Open Skies software to handle electronic tickets, internet bookings, and revenue management. • To reduce travel agent commission, JetBlue booked more than 75 percent of its sales on its own Web Site and lead the industry. • JetBlue hired full time travel agents to sell tickets over the telephone. This helps travelers book...
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...PEMBAHASAN Untuk menanggulangi masalah internal pada tahun 2005, JetBlue melakukan upgrade televisi yang ada di sandaran kursi. Semua pesawat baru yang dilengkapi dengan TV yang lebih besar, dan semua pesawat tua juga dipasang. Pada saat yang sama, maskapai ini juga dilengkapi semua pesawat dengan XM radio satelit, dan meningkatkan ukuran overhead bin di pesawat. Kebanyakan LCC memberikan minuman gratis dan menjual makanan, atau disajikan gratis dalam jumlah yang terbatas. Tapi JetBlue menawarkan berbagai makanan ringan dan minuman gratis dalam jumlah yang tidak terbatas. Meskipun maskapai mulai menyediakan keripik, kue, dan kopi, selama bertahun-tahun itu menambahkan beberapa item untuk lini minuman dalam penerbangan. Pada tahun 2007, maskapai ini menawarkan berbagai minuman panas dan dingin dan beberapa jenis makanan ringan. Penumpang yang bepergian dengan penerbangan red-eye diberi gratis spa kemudahan kit yang memuat lip balm mint, body butter, sebuah perisai mata, dan earplugs. JetBlue juga mendirikan bar camilan complementary di pesawat untuk penerbangan semalam, dan penumpang diberi gratis handuk panas, kopi Dunkin Donuts atau teh, jus jeruk atau air minum, tepat sebelum mereka mendarat keesokan harinya. Pada bulan April 2006, segera setelah mengumumkan kerugian kuartal pertama, Neeleman dan Barger mengumumkan rencana pemulihan JetBlue disebut rencana"Return to Profitability" (RTP). Tujuan utama dari RTP adalah optimalisasi pendapatan, peningkatan kapasitas...
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...JetBlue Airways: Managing Growth Case Analysis Instructed by: Prof. Jonathan Lee Section3 Team 2 Jie Yan | 103795915 | Ling Lu | 103999797 | Nan Liu | 103744807 | Renhan Zhu | 103943651 | Yishi Shi | 103956048 | 2014/10/20 Part I: Issue Identification In May 2007, David Barger, President and CEO of JetBlue Airways, expressed the great need to slow down the airline’s growth in response to increasing fuel costs and the consequences stemmed from the Valentine’s Day crisis. As an LCC, JetBlue had to decrease its growth rate by reducing deliveries of E190 and A320 due to its weak financial position and the market’s softening demand. Considering the performance of JetBlue after the addition of E190 to its fleet, JetBlue overestimated its capacity of handling this large scale of expansion. The new CEO, David Barger was now facing with JetBlue’s key issue that he should reconsider the distribution of E190 and A320, and building long-term managing strategies for sustainable development. Besides, with a big movement of launching E190 in 2005, some small but critical problems loomed: Compensation of pilots, satisfaction of customers and employees, challenges for staff to adopt unexpected changes, complexity resulting from the integration of E190 and A320. Without experience of operating two types of aircrafts and combining them, as well as without sufficient capital, large scale of purchases of the new aircraft would definitely lead to operational failure...
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...JetBlue Case Study Analysis JetBlue Airways Corporation Overview JetBlue Airways Corporation is an American low-fare airline, which headquartered in the Long Island City near the New York City. Its main base is John F. Kennedy International Airport. Basically, the airline mainly serves destinations in the United States, as well as many Latin American countries. As of October 2013, JetBlue serves 84 destinations in multiple countries. Low-fare airline is an airline that generally with a lower operating cost structure. In many people’s view, low-are airline also with has low ticket prices and limited services. However, JetBlue is a low-fare airline corporation with a goal of fixing everything that “sucked” about airline travel. Its passengers could get unique flying experience by providing new aircraft, simple and low fare, leather seats, free LiveTV at every seat, preassigned seating, reliable performance, and high-quality customer service. JetBlue Airways Corporation David Neeleman, the starter of JetBlue, had raised funds of $130 million for this brilliant company at the beginning. Even JetBlue has strong support from venture-capital community, it also had the intent to go public in April 2002. At that time, the whole industry was still in recession due to 9/11 attack. A company sells stock shares to the general public for the first time via security exchange, it is Initial public offering (IPO). Before IPO, there is no general shareholders in the company. After IPO,...
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...What is an IPO and why is it such a big deal? Is this a good idea for JetBlue? Explain. When a privately held company makes its stock available to the general public for the first time on a securities exchange, this is known as the company’s Initial Public Offering (IPO). The IPO can consist of an initial issue of either debt or equity. The IPO process is also referred to as a private company “going public”. There are numerous benefits associated with going public. IPO benefits include enlarging and diversifying a company’s equity base, allowing cheaper access to capital, improving public image, attracting better management and employees through stock options, enabling transfer of company ownership through mergers/acquisitions, and providing increased financing opportunities (through equity, convertible debt, bank loans, etc.). IPO Process Executing an IPO is an extensive, time-consuming, and complicated process for the senior management team of a company. The main steps of the process are outlined below: • Hire an investment bank as an underwriter—the underwriters’ purpose is to negotiate ways to raise capital (by either debt or equity) and interface with the public. (In JetBlue’s case, the underwriter was Morgan Stanley.) • Begin to negotiate with the underwriters about all the required information that will be contained in the underwriting agreement. This information includes the amount of capital the company wants to raise, types of securities that will be issued...
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...Memorandum TO: FROM: DATE: September, 27 2013 RE: One-Page Memo on JetBlue Case Study The purpose of this memorandum is to discuss the JetBlue case study, and review my answers to the specified questions. I will elaborate as to which price I believe JetBlue should choose for their initial public offering (IPO), and why JetBlue should choose that price. The first step in determining JetBlue’s IPO price is analyzing specific ratios of publicly traded competitors in JetBlue’s industry. I analyzed the Price-to-Earnings multiples, Cash Flow multiples, Total Assets multiples, and the Revenue multiples of the direct competitors of JetBlue. JetBlue’s direct competitors include; AirTran, Alaska Air, American West, MidWest, and Southwest. JetBlue’s relative stock prices are as follows: |JetBlue's Stock Prices Implied By Different Multiples | |Airline |P/E Multiple |CF Multiple |TA Multiple |Revenue Multiple | |AirTran |$36.41 |$23.71 |$45.20 |$9.24 | |Alaska Air |$47.23 |$27.64 |$30.69 |$8.92 | |American West |$29.04 |$30.82 |$26.24 |$8.39 | |MidWest |-$15.60 |-$11.42 |$39...
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...Case 1- JetBlue Airways IPO Valuation - Jing Zhang ( 23913134 ) A company issue stocks to generial public at its first time on a security exchange is call Initial Public Offering( IPO ). Initial Public Offering enable a company to raise capital from the public rather than private investors or institutions. IPO is considered as such a big deal for a company mainly because the company become a public corporation and have to be monitored by general pubic after IPO. Going public has bought about a considerable numbers of benefits. For instant, IPO increse the liquidity of capital and enable cheaper access to open market. Furthermore, going public enhance the popularity of a company and make it easier to fund from other financial institutions such as commercial banks in the future. On the other hand, the cost of IPO is expensive and it requires a company to disclose the financial and business information to publc investors. JetBlue Airways Corporation is an American low-fare airline headquartered in New York city and its home base is John F. Kennedy Airport( JFK ). Following the terrorist attacks of September 2001, tbe U.S airline industry was experiencing an unprecedented hardship. At that time, airline industry is considered as an high-risk industry in terms of investment, and it was widely believed that the market lost faith in airline industry. However, in Apirl 2002, JetBlue Airways decided to have its Initial Public Offering just two...
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...in the case, the types of information systems are - TPS ( Transaction Processing)system that is used for making the reservation, papereless processes in this case - CRM (Customer Relationship Management) that enables the customers the communication with the airline company and acquire updated flight info such as delays and cancellations - ESS (Executive Support System)- rovides senior management a way to address strategic issues and planning based on results provided by the systems 2. Jet Blue business model was to provide a luxurious flying experience by using info systems to automate key processes such as the process of ticket sales, and baggage handling, they were also used to manage planes, crews and scheduling. This enabled the airline to turn a profit by running its business at 70% of the cost of larger competitors. The Jet Blue scored customer retention rate of 50%. 3. The problem appeared when the ice storm struck the NYC area. JetBlue made a fateful decision to maintain its schedule in the belief that the horrible weather would break. The weather conditions and the delays or cancellations of other flights caused customers to flood JetBlue’s reservation systems, which couldnt handle the onslaught. Also, JetBlue didnt have a system in place for the rested crews to call in and have their assignments rerouted. The communication system was inadequate. The department responsible for allocating pilots and crews to flights was too small. JetBlue had grown...
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