To get a proper range for JetBlue‟s offering price we will look at market multiples for the Low-Cost Airline Industry and come up with a number that makes sense, once we compare those other financials to JetBlue‟s. Below is a chart describing some of
JetBlue‟s competitors and the multiples that they carried at the end of 2001. We’ve calculated what their price should be based upon these multiples and can now apply the same technique for JetBlue.

Based upon the information above we can figure out what the average PE Multiple is for the five companies similar to JetBlue, which comes out to be 24.53. According to Exhibit 3 in the case write-up, JetBlue has a Diluted EPS of $1.14. Multiplying those two together would give us a Price/Share of $27.97. If we were to go off of the
Pro Forma EPS ($1.30/share) the equity price would be even higher at $31.89.

This is obviously a very large range, but sometimes it is best not to use static prices based upon just the current year. The case also gives forward looking ratios for these companies as well. As shown below we have gone ahead and calculated what they look like moving forward.

Thus, much like before using the average EBIT multiple and PE multiple for these five companies, we can extrapolate figures for JetBlue as well and come up with an equity price of $37.71 and $13.67 respectively. Taking all five of these figures into consideration and averaging them out gives us a price of $27.81.
Given the figures that we calculated and the current economic state of the market, we would recommend the IPO price to be set between $23 and $25.