...Yale School of Management 135 Prospect Street, New Haven, CT 06511 JetBlue Airways October 9, 2002 Time Frame 12 Months Recommendation SELL Recommendations: Buy: >20% Undervalued Hold: Fair Market Value Sell: >20% Overvalued “If you want to become a millionaire, start with a billion dollars and launch a new airline…” - Richard Branson, founder of Virgin Atlantic Airways Team Members: Brad Anen brad.anen@yale.edu (203) 865-6166 % Returns Over the Last 12 Months (Prices are as October 7, 2002) mike.bizzario@yale.edu (203) 675-9244 Begonya Klumb begonya.klumb@yale.edu (203) 772-0718 Carla Sayegh carla.sayegh@yale.edu (203) 773-1177 Portfolio Manager: Sean O’Dowd Sean_odowd@yale.edu Airline Index (^XAL): S&P 500: JetBlue (JBLU): (59.80)% (26.70)% (20.73)% JBLU Current Price: JBLU Target Price: $35.75 $29.44 Projected (Short) Return: Mike Bizzario 17.65% Yale School of Management Page 2 of 17 RECOMMENDATION: SELL • • • • Short-lived, well-funded track record is unsustainable in current economic climate. Threat to cost structures within airline industry due to potential invasion of Iraq and resultant oil price increases. Immediate shorting opportunity due to overvaluation as compared to the industry (JetBlue P/E ratio is higher than the industry average by 18%) valuation ratios. Height of financial performance is already reflected in the JBLU’s stock price, and we are bearish about...
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...F. Kennedy. He was the 35th President of U.S.A., the youngest and very modern. After his tragic death, his legend is still alive and his influence on American life and politics was seen for a long time. This paper will provide analysis of how Kennedy’s leadership style and present how successful leader he was. 2. John F. Kennedy – the background and the path to success John F. Kennedy’s way to Presidency started in 1917 in Brookline, Massachusetts, where he was born as the second son of Joseph and Rose Kennedy. The Kennedy family was reach, Joseph Kennedy was successful businessman, Rose’s father, John Fitzgerald, was the mayor of Boston.(Ratma, 2002) Both Joseph and Rose expected from their children to achieve a lot, especially from sons. Parents believed that all citizens should serve their country and being politician is the most honorable way of doing that. They pay attention to education and they can afford for sending their children to the best elite schools. At the age of thirteen John F. Kennedy (called JFK) was sent to the Catholic school for boys located fifty miles away from home. He had to deal with loneliness and homesick, this experience from childhood strengthened him and helped to shape his future character. From a childhood JFK suffered from different...
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...effect on the U. S. airline industry. These trends present a noteworthy challenge to an airline’s performance and business strategy. These subsequent trends will be introduced and discussed: 1) crude oil prices; 2) rise of video teleconferencing; 3) global economic decline; 4) social media and brand perception; and 5) post 9/11 security requirements. In analyzing these trends, crude oil prices and their effect on the industry will be explored first. Trends in the U.S. Airline Industry According to Oil-Price.Net, crude oil prices were reported at $103 per barrel as of April 15, 2012. Government figures suggest that jet fuel prices have risen 12 percent since January, which is a 4 percent from last year. In response to the increase, Delta, Frontier, American JetBlue, Southwest and others have increased fares in an attempt to offset costs (USA Today, 2012). While increased fees, fares and related charges have been levied upon the travelers to assist in offsetting the cost of fuel, it is important to mention that these fees and increases are also a source of revenue generation for the airlines. When fuel costs decline, the fees and charges do not and could possibly increase an airline’s profit margin. Fuel cost is not the only significant challenge to the airline industry. As technology has evolved, business travel has declined as a result of teleconferencing capabilities. Corporations are often trying to cut or keep costs low while still delivering a quality product and reporting...
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...Strategic Report for JetBlue Airways Harkness Consulting Innovation through Collaboration Rosanna Smart Alisher Saydalikhodjayev Sayre Craig April 14, 2007 Table of Contents Executive Summary ………………………………………………..3 Company History ………………………………….………………..4 Competitive Analysis ………………………………………………7 Internal Rivalry …………………………………………………………. 8 Entry ………………………………………………………………………… 9 Substitutes and Complements …………………………………….. 11 Supplier Power ………………………………………………………….. 12 Buyer Power …………………………………………………............... 13 Financial Analysis ………………………………………………….14 SWOT Analysis ………………………………………………………23 Strategic Issues and Recommendations …………………..25 References ……………………………………………………………30 Harkness Consulting 2 Executive Summary From its initial flight in February 2000, JetBlue emerged into the heavily competitive airline industry as the little airline that could. While legacy carriers declared bankruptcy, JetBlue trounced its competition by offering low‐cost, customer‐focused service. Under the direction of the energetic David Neeleman, JetBlue became a major player in the airline industry. Operating domestic flights on a point‐to‐point system, JetBlue primarily manages East‐West and Northeast‐Southeast routes. While this route structure initially proved profitable for the company, rising costs and heated price competition are currently threatening JetBlue’s market share. The com...
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...Administration Financial Management FNC535M RCBC Plaza Room No. 526 “Big City Trust Company” Case Analysis & Corporate Strategy Group 4 Report Estepa, Joan Carla E. | Member | BSC Management, Corporate Focus | Reyes, Corinne Erlyn L. | Member | BA Humanities with Professional Certificate in Business Management | Yan, Lee Rainier C. | Member | B.S. Chemical Engineering | Dean Atty. Joe-Santos Balagtas Bisquera MBA Professor Case Analysis Executive Summary According to the case, Auto-Drive Company is developing an Auto-Drive which will be installed in cars, a technology that would switch cars into automatic pilot. This kind of advancement will make it impossible for the car to run off the road or into another car. Mr. Cooper, a senior trust officer at Big City Trust Company, finds this innovation very promising for the automobile industry and believes that this would be a great investment. He sees the benefits it could bring to customers and he saw a market for this technology. The new venture leads Mr. Cooper to study the Xerox and Polaroid Company methods on how these two companies financed their growth, since they are both successful innovators in their own fields. Mr. Richard Brainard, an analyst in the trust department was asked to gather and examine the facts and financial statements of the two companies they will need for the analysis for the period 1960-1964. This study would help Big City Trust Company to determine what approach and...
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...JETBLUE AIRLINES The Basics of JetBlue Airlines JetBlue was founded in 1998 by David Needleman and many of the first executives, including Needleman were former Southwest Airlines employees. First flight was from Buffalo, NY to Fort Lauderdale, FL in February 2000. One operating base: JFK International Airport Five focus cities: Orlando International, Luis Muñoz Marín International Airport (San Juan) International, Logan International (Boston), Long Beach and Fort Lauderdale – Hollywood International Airports. 84 destinations, 198 aircraft Company slogan: You Above All 15,000+ employees JetBlue’s Nasdaq price from 2002 to present (JBLU) Brief History of the Domestic and Global Airline Industry The two of the oldest airlines in the world which are still operating are Qantas (Queensland And Northern Territory Aerial Services) in Australia and KLM (Koninklijke Luchtvaart Maatschappij) Airlines, in the Netherlands, both of which started flying in 1920. Following World War I and many trained veteran pilots, with airmail service offered by the United States Postal Service through contract air carriers some of which evolved into PanAm, TransWorld, American, and Delta Airlines. Following World War II, the commercial airline industry continued to expand under government regulation. Until congress deregulated the airline industry in the United States in 1978 and airlines were able to set the prices for their own fares...
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.......................................................................................... 4 Financial Analysis ............................................................................................... 8 Current Financial Position.................................................................................. 8 Industry Comparable Analysis ......................................................................... 12 Stock Performance .......................................................................................... 14 Management and Analyst Outlook................................................................... 15 Competitive Analysis ........................................................................................ 16 Internal Rivalry ................................................................................................. 17 Supplier Power ................................................................................................ 18 Buyer Power .................................................................................................... 19 Entry and Exit .................................................................................................. 19 Substitutes and Complements ......................................................................... 20 SWOT Analysis .................................................................................................. 23...
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...NONLINEAR PRICING STRATEGIES AND MARKET CONCENTRATION IN THE AIRLINE INDUSTRY A Dissertation by MANUEL A. HERNANDEZ GARCIA Submitted to the Office of Graduate Studies of Texas A&M University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY August 2009 Major Subject: Economics UMI Number: 3384249 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. UMI 3384249 Copyright 2009 by ProQuest LLC. All rights reserved. This edition of the work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, MI 48106-1346 NONLINEAR PRICING STRATEGIES AND MARKET CONCENTRATION IN THE AIRLINE INDUSTRY A Dissertation by MANUEL A. HERNANDEZ GARCIA Submitted to the Office of Graduate Studies of Texas A&M University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Approved by: Chair of Committee, Steven N. Wiggins Committee Members, Li Gan James Griffin Steven L. Puller Head of Department, Larry Oliver August 2009 Major Subject: Economics iii ABSTRACT Nonlinear Pricing Strategies and Market Concentration in the Airline Industry. (August 2009)...
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...A Dynamic Oligopoly Game of the US Airline Industry: Estimation and Policy Experiments Victor Aguirregabiria∗ University of Toronto Chun-Yu Ho∗ Boston University This version: November 19, 2007 PRELIMINARY AND INCOMPLETE VERSION Abstract This paper estimates the contribution of demand, cost and strategic factors to explain why most companies in the US airline industry operate using a hub-spoke network. We postulate and estimate a dynamic oligopoly model where airline companies decide, every quarter, which routes (directional city-pairs) to operate, the type of product (direct flight vs. stop-flight), and the fare of each route-product. The model incorporates three factors which may contribute to the profitability of hub-spoke networks. First, consumers may value the scale of operation of an airline in the origin and destination airports (e.g., more convenient checking-in and landing facilities). Second, operating costs and entry costs may depend on the airline’s network because economies of density and scale. And third, a hub-spoke network may be an strategy to deter the entry of non hub-spoke carriers in some routes. We estimate our dynamic oligopoly model using panel data from the Airline Origin and Destination Survey with information on quantities, prices, and entry and exit decisions for every airline company over more than two thousand city-pair markets and several years. Demand and variable cost parameters are estimated using demand equations and Nash-Bertrand equilibrium...
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...program launch of the Boeing 777X, a massive new hit thanks to Emirates’ record order of 150 new planes. Valued at $76 billion at list prices, this was the largest airplane deal ever inked. Letting his thoughts drift, he noted, he imagined with pride these planes joining the collection of widebodied Emirates planes assembled on the tarmac of Dubai International Airport, ready to ferry passengers from Europe, Asia, Africa, the Americas and the Gulf to their respective destinations. This is the face of the global economy, he thought to himself, as he marveled at his company’s success. Emirates was indeed a global success story. In just twenty-five years the airline had grown to become the third-largest airline globally by capacity and the largest by number of international passengers.1 (See Exhibit 1). Twenty-three new routes were added in 2012 and 2013,2 and capacity growth was expected to increase by 18.4% in 2013 thanks to deliveries of new aircraft, including the new A380s deployed to over 20 destinations.3 Emirates anticipated that its meteoric growth would continue and was building its fleet accordingly: with 41 A380s integrated into its fleet thus far, another 99 were scheduled for delivery in the coming years (See Exhibit 2).4 At the same time, several trends threatened to stymy the airline’s growth. Chief among them were the new 777Xs and A380s themselves. How would Emirates deploy these craft amongst its existing fleet and across new routes? Was investing over $117 billion...
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... BERNATH LECTURE The New International History of the Cold War: Three (Possible) Paradigms* The Cold War is not what it once was. Not only has the conflict itself been written about in the past tense for more than a decade, but historians’ certainties about the character of the conflict have also begun to blur. The concerns brought on by trends of the past decade – such trifles as globalization, weapons proliferation, and ethnic warfare – have made even old strategy buffs question the degree to which the Cold War ought to be put at the center of the history of the late twentieth century. In this article I will try to show how some people within our field are attempting to meet such queries by reconceptualizing the Cold War as part of contemporary international history. My emphasis will be on issues connecting the Cold War – defined as a political conflict between two power blocs – and some areas of investigation that in my opinion hold much promise for reformulating our views of that conflict, blithely summed up as ideology, technology, and the Third World. I have called this lecture “Three (Possible) Paradigms” not just to avoid making too presumptuous an impression on the audience but also to indicate that my use of the term “paradigm” is slightly different from the one most people have taken over from Thomas Kuhn’s work on scientific revolutions. In the history of science, a paradigm has come to mean a comprehensive explanation, a kind of scientific “level”...
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...Office of Inspector General AVIATION INDUSTRY PERFORMANCE A Review of the Aviation Industry, 2008–2011 Number: CC-2012-029 Date Issued: September 24, 2012 Memorandum U.S. Department of Transportation Office of the Secretary of Transportation Office of Inspector General Subject: INFORMATION: Aviation Industry Performance: A Review of the Aviation Industry, 2008–2011 Controlled Correspondence No. 2012-029 Calvin L. Scovel III Inspector General The Secretary Acting Federal Aviation Administrator Assistant Secretary for Aviation and International Affairs Date: September 24, 2012 From: To: Since its inception, the aviation industry has undergone significant transformations as a result of technological developments, economic pressures, and other factors. Most recently, economic recession and recurrent high fuel costs have challenged U.S. airlines, which have taken a number of actions to lower costs and increase revenue—including capacity reductions, fare increases, baggage fees, and mergers. Beginning in 2002, the Office of Inspector General has issued periodic reports regarding the performance of the aviation industry. This report, the 11th in the series, focuses primarily on industry performance during the 2008–2011 period and summarizes long-term trends since 2000. This report also highlights issues related to changes in airlines’ business environment, the industry’s reactions to those changes, and the impact of these actions on the traveling public...
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...GLOBAL AVIATION GROUP 2013 Airline Disclosures Handbook Financial reporting and management trends in the global aviation industry kpmg.com KPMG’s Global Aviation practice KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Through its member firms, KPMG has invested extensively in developing an experienced aviation team. KPMG’s understanding of the aviation industry is both current and forward looking, thanks to KPMG’s global experience, knowledge sharing, industry training and use of professionals with direct experience in the aviation industry. KPMG member firms serve many of the market leaders within the airline sector. We are leading providers of external audit services with 33% market share of the top 50 airlines by revenue. We also provide other services to over half of these top 50 airlines. KPMG member firms’ strength lies in our professionals and their knowledge and experience gathered from working with a large and diverse client base. KPMG’s airline industry experience helps the teams understand both your business priorities and the strategic issues facing your company. KPMG’s Global Aviation practice’s presence in many international markets, combined with industry knowledge, positions KPMG...
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...Total Quality Management has been considered as one of the most significant management innovation of the 20th century. TQM is based on quiet native and traditional views of an organization but it has had a major influence on the contemporary management practices. TQM role and concepts are examined based upon how an organization will meet its mission and the definitive objective for long term survival. Organization‘s main concern is how to achieve organizational goals & long term survival, it depends on multiple factors. The very basic level of organizational survival is based on the internal integration and the process of external adaptation. The first section of the report presents the articles on which our study is based, the second section of the study is the introduction of the organization, and the third section shows the passenger survey and questionnaire. Fourth section results explorations and investigates of the challenges and problems which the national carrier PIA (Pakistan International Airline) is facing while implementing TQM. The findings and results advocate that Total Quality Management System should develop itself with the changing internal and external environment. Some strategies have been by us which would improve the performance of the organization and help it to cope up with the challenges. At last, our research conclusion & there also recommendations were made which are helpful for the organization (Pakistan International Airline)...
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...Total Quality Management has been considered as one of the most significant management innovation of the 20th century. TQM is based on quiet native and traditional views of an organization but it has had a major influence on the contemporary management practices. TQM role and concepts are examined based upon how an organization will meet its mission and the definitive objective for long term survival. Organization‘s main concern is how to achieve organizational goals & long term survival, it depends on multiple factors. The very basic level of organizational survival is based on the internal integration and the process of external adaptation. The first section of the report presents the articles on which our study is based, the second section of the study is the introduction of the organization, and the third section shows the passenger survey and questionnaire. Fourth section results explorations and investigates of the challenges and problems which the national carrier PIA (Pakistan International Airline) is facing while implementing TQM. The findings and results advocate that Total Quality Management System should develop itself with the changing internal and external environment. Some strategies have been by us which would improve the performance of the organization and help it to cope up with the challenges. At last, our research conclusion & there also recommendations were made which are helpful for the organization (Pakistan International Airline)...
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