Premium Essay

Jetblue Airways Ipo Valuation

In: Business and Management

Submitted By proo789
Words 644
Pages 3
JetBlue Airways IPO Valuation
Summary
In July 1999, David Neeleman announced his plan to launch a new airline that would bring “ humanity back to air travel.” Despite the fact the airline industry had 87 new-airline failures in U.S. over the past 20 years. Neeleman’s plan convinced a group of investors and quickly raised $130 million from venture-capital community. This is the way JetBlue Airways established. With its strong capital base, JetBlue acquired a fleet of new Airbus A320 aircraft and focused on low-cost, point-to-point service to large metropolitan areas with high average fares or highly traveled markets that were underserved. This strategy brought JetBlue Airways an excellent position in the beginning phase. JetBlue Airways started to expand aggressively and remained profitable even after the terrorist attacks of September 2001 by insisting on its low-fare strategy. In April 2002, barely two years since established, JetBlue meet its initial public offering (IPO). The initial price range for JetBlue shares was $22 to $24, but facing sizable excess demand, the management increased the range as $25 to $26. After the whole process of IPO including SEC review and comments, roadshow, pricing, tombstone advertisements, JetBlue finally launched in NASDAQ at $27/share as initial pricing, closed at $45/share on the first day of trading. With the proper strategy in IPO process, JetBlue make a huge success on its IPO.
Questions
Why JetBlue Airways can still remain profitable while most airline companies facing decline after 911 terrorist attacks?
JetBlue had made significant progress in establishing a strong brand image as a safe, reliable, low-fare airline that was highly focused on customer service and enjoyable flying experience. In addition, JetBlue’s target market that focusing on large metropolitan such as New York, Florida, Buffalo is very efficient…...

Similar Documents

Free Essay

Jetblue Airway

...Thông tin chung 2 2. Tổng quan 2 3. Đội tàu bay của JetBlue Airways 3 II. LỊCH SỬ HÌNH THÀNH VÀ QUÁ TRÌNH PHÁT TRIỂN 4 1. Lịch sử hình thành 4 2. Quá trình phát triển 6 3. Thành tựu đạt được 9 a. Quy mô kinh doanh 9 b. Thị phần và tốc độ tăng trưởng 9 c. Đội ngũ nhân viên 10 d. Các giải thưởng 11 III. VIỄN CẢNH, SỨ MỆNH 13 1. Viễn cảnh 13 a. Tư tưởng cốt lõi 13 b. Hình dung tương lai 15 2. Sứ mệnh 16 a. Định nghĩa kinh doanh 16 b. Giá trị 16 c. Mục tiêu 18 I. GIỚI THIỆU CÔNG TY 1. Thông tin chung * Tên công ty : JetBlue Airways Corporation. * Lĩnh vực kinh doanh: Vận tải hàng không. * Người điều hành: * Chủ tịch và Giám đốc điều hành độc lập: David Barger * Giám đốc điều hành: Joel Peterson * Người sáng lập: David Neeleman. * Năm thành lập: 1999. * Trụ sở chính: 118-29 Forest Hills Buiding – Queens – New York – USA 11375 * Mã chứng khoán: JBLU * Website : www.jetblue.com 2. Tổng quan JetBlue Airways Corporation là một hãng hàng không giá rẻ hàng đầu của Mỹ, đặt địa điểm bay chính thức tại sân bay Quốc tế Jonh F.Kennedy. Hãng được thành lập vào năm 1999 bởi ông David Neeleman tại New York – Mỹ. Hiện nay, JetBlue đang đứng vị trí thứ 6 trong tổng thị phần hàng không nội địa của Mỹ với 4,8% thị phần và được công nhận là hãng hàng không nội địa tốt nhất tại khu vực Bắc Mỹ. JetBlue chuyên cung cấp các chuyến bay trực tiếp hoạt động......

Words: 6233 - Pages: 25

Premium Essay

Jetblue Airways

...JetBlue Airways Bus630 Managerial Accounting Lawanda M. Bishop Professor Gregory Goussak 10/12/2012 1. JetBlue’s strategy for success in the marketplace is to stimulate demand with lower fares, emphasize low operating costs that stimulate market demand while operating efficiencies and costs. It also strives to benefit from economies of scale from its future expansion. By offering low rates, product leadership and customer value, their demand will increase, offering travelers with a low-cost alternative. JetBlue have one of the largest load factors in the United States. By relying on customer intimacy, operational excellence, and product leadership customer value proposition, allows JetBlue to become successful in their strategies. The four key elements to JetBlue’s strategy is how they stimulate the demand with lower fares, how they emphasize low operation costs, how they offer point to point flights to consumers who are under served or live in over price large markets. Due to its strategies, JetBlue has been able to grow largely as a company and become one of the leading airlines which focuses on customer satisfaction at a low operating cost. (Zuckerman, 2008) 2. Many organizations face day to day threats that are beyond their control and these risks can threaten any company’s ability to satisfy their stockholders . JetBlue operates in an extremely competitive industry and some of the threats JetBlue may...

Words: 737 - Pages: 3

Premium Essay

Ipo Valuation

...|IPO Valuation Procedure in Bangladesh | | | | | | | Internship Report IPO Valuation Procedure in Bangladesh Prepared for: Professor Shakil Huda Chairman IBA Career Center Institute of Business Administration University of Dhaka Supervised by: MsSyedaMahrufa Bashar Lecturer Institute of Business Administration University of Dhaka Prepared by: Asif Rezwan Roll: 64, MBA 44D and Management Trainee Officer, LankaBangla Investments Limited Institute of Business Administration University of Dhaka June 24, 2012 June 24, 2012 MS. Kanij Fahmida Assistant Professor Department of Accounting Faculty of Business Studies Bangladesh University of Business & Technology(BUBT) Dear Sir, Subject: Letter of Transmittal for Internship Report I, Ibna Shina Shibly, am submitting my internship report on “IPO Valuation Procedure in Bangladesh”. The internship period and the subsequent effort in writing this...

Words: 7525 - Pages: 31

Premium Essay

Jetblue Airways Ipo Valuation

... The case “JetBlue Airways IPO Valuation” outlines JetBlue’s innovative strategy and the associated strong financial performance over the initial two years, in order to determine the price of initial public offering of its stock on April 2002. To the whole industry of Airlines, the terrorist attacks of September 2001 caused a challenge, especially to large numbers of low-fare U.S. airlines. However, JetBlue remained profitable and grew aggressively. From 2002, the low-fare business model gained momentum in the U.S. airline industry. The dominant player among low-fare airlines, Southwest Airlines, has been going so successfully with its stable growth rate of revenue (Exhibit 8) and increasing operating margin forecasts (Exhibit 5). As a relatively new company, JetBlue had made significant progress in establishing a strong brand by seeking to be identified as a safe, reliable, low-fare airline. In addition, a solid Neeleman’s management team, with David Barger and John Owen joining, was formed to enhance the success of going public. Therefore, to support JetBlue’s growth trajectory, going public and raising financing for the company is appropriate at this moment. Going public has both advantages and disadvantages. Advantages The main purpose of going public is to increase capital for the issuer. A public offering would place a value on the company's stock and insiders who retain stock may be able to sell their shares or use them as collateral. Going......

Words: 1735 - Pages: 7

Free Essay

Jetblue-Airways-Ipo-Valuation

...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 th...

Words: 299 - Pages: 2

Free Essay

Jetblue Airways

...JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation......

Words: 308 - Pages: 2

Premium Essay

Jetblue Ipo Case Study

...| JetBlue Airways | | Valuation of an IPO Case Study | | JetBlue Airways | | Valuation of an IPO Case Study | 2014 Ivan McClure, Imtiaz Saboor, Vanessa Lopes, Gilberta Pjetri 2014 Ivan McClure, Imtiaz Saboor, Vanessa Lopes, Gilberta Pjetri TABLE OF CONTENTS * History * Advantages & Disadvantages of an IPO * IPO Process * Weighted Average Cost of Capital (WACC) * Similar Company Analysis * Discounted Cash Flow Analysis * Final Decision History David Neeleman, an experienced entrepreneur in airline startups, announced that JetBlue would bring “humanity back to air travel” on July 1999. He was convinced that his commitment and innovation would keep the planes full and moving despite the fact that 87 new-airline startups had failed in the last twenty years. An impressive new management team and growing group of investors shared Neeleman’s vision. JetBlue’s management team included David Barger, former vice president of Continental Airlines. Neeleman received strong support in funding from high-profile firms such as Weston Presidio Capital, Chase Capital Partners, and Quantum Industrial Partners, and quickly raised $130 million. Neeleman’s goal was to “fix everything that sucked about air travel”. His strategy was built on that goal as well providing the passengers with new aircraft, simple and low fares, leather seats, free Live TV at every seat, pre-assigned seating, and high quality customer service...

Words: 2255 - Pages: 10

Premium Essay

Jetblue Ipo Case

...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......

Words: 922 - Pages: 4

Premium Essay

Jetblue Airways Analysis

...Analysis of JetBlue Airways JetBlue Airways is a young airline that is very successful and is also growing rapidly. In this analysis, the human resource strategies, policies, and practices will be reviewed and analyzed with suggestions as to how human resources practices and equal opportunity employment law relates to JetBlue and how these practices and laws can be beneficial to all of the organization's human resources areas but also how they can be beneficial to JetBlue as an organization with a bright future. Hiring Practices JetBlue already has impressive hiring practices because they focus on finding the right people with great attitudes. However, there are three national equal employment laws that have been identified that will impact JetBlue's hiring practices. The first law identified is the Age Discrimination Act of 1967 which prohibits "employers from discriminating against individuals who were 40 to 65 years old" (Mondy, 2012). In making sure not to discount hiring people over the age of 40 whether they have previous airline experience or not can benefit JetBlue as an organization because many workers that are over the age of 40 have a great work ethic along with great customer service skills as noted by CVS executive, Stephen Wing (Mondy, 2012). This also creates diversity in the workplace which only enhances the organization. The second law identified is Title VII of the Civil Rights Act of 1964 that was amended in 1972. Title VII prohibits an......

Words: 3302 - Pages: 14

Premium Essay

Jetblue Airways

...Mahasarakham University Mahasarakham Business School Case 20: JetBlue Airways Subject: Business Policy and Strategic Management Instructor: Dr. Olimpia C. Racela Group Members: 1. Miss. Nguon Phuongtepsonich ID: 540101919847 2. Miss. Shi Lilin ID: 54010919850 3. Miss. Ananya Duangthowset ID: 54010919845 Submitted Date: Thursday, September 18, 2014 JetBlue Airways 1. Situation Analysis JetBlue Airways was founded by David Neeleman and lawyer Tom Kelly in 1998 with $160 million of capital. Its main base is John F. Kennedy International Airport (JFK) in New York. JetBlue positioned itself as the Low-Cost Carrier (LCC) but distinguish itself by its services such as in-flight entertainment, TV on every seat and Satellite radio. SWOT Analysis: Strengths | Weaknesses | * Good customer service: * Allow passengers to choose their seat on the plane whenever possible. * Unlike other LCC, JetBlue served free snacks on board. * Cost management: * Saving more cost by serving snack rather than meal. * Good routing management: * Flew only point-to-point flights helps to avoid the complication that resulted from connecting flights and passenger transfers. * High technology: * E-ticket and paperless operation. * Human resource management: * Family-like atmosphere at the workplace which leads to positive attitude in its employees. * Employees were free to suggest ideas and comments in order to improve operations. ...

Words: 1388 - Pages: 6

Premium Essay

Jetblue Airways

...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......

Words: 6380 - Pages: 26

Premium Essay

Jetblue Airways: Managing Growth

...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......

Words: 2263 - Pages: 10

Premium Essay

Assignment 1: Jetblue Airways

...#3 Jet Blue Airways A Cadre of New Managers Takes Control Strategic Management BUS 599 051*VA016*1122*001 Dr. Russell Handlon January 15, 2012 Case 3: Jet Blue Airways Question 1 Discuss the trends in the U.S. airline industry and how these trends might impact a company’s strategy. The trends in the United States airline industry is high prices on gas, oil, maintenance, risks of terrorism, and less travelers flying rather its for personal or business. When these things happen it costs the airlines to make some changing by charging customers for checking their luggage, food, pillows, blankets, and leisure entertainment in order to meet the high spending cost of the airline business. Some airlines had to change their flight schedule to meet the needs of the customers during high peak time in popular vacation spots or other locations customers like to fly too by charges them lower fares. Some airlines have is shortage of pilots because the school of flying does not have enough instructors to train new pilots (Thompson, Strickland, & Gamble, 2010). Question 2 Discuss Jet Blue’s strategic intent. The founder of JetBlue Airway is David Neeleman, he wants to “bring humanity back to air travel.” Mr. Neeleman announced JetBlue’s “Passenger Bill of Right” is a policy for United States airline companies regarding vouchers, refunds in case of delays, cancellations, and other inconveniences (Thompson, Strickland, & Gamble, 2010). JetBlue Airways exists to......

Words: 1252 - Pages: 6

Premium Essay

Jetblue Airways

...JetBlue Airways Air travel is a large and expanding industry. It facilitates economic growth, world trade, international investment, tourism, and is critical to globalization. Over the past ten years, air travel has grown by approximately seven percent per year. However, the airline industry suffered its largest downturn between 2008 and 2009, due to the economic downturn. Airlines carried 767,627,651 passengers in 2009, down from 809,447,811 passengers in 2008. Airlines have been forced to accommodate the economic recession by cutting flights, rescheduling existing routes, and looking for new revenue streams. As the economic recession revives itself, the demand for flights has begun to increase with 787,182,312 passengers flying in 2010; a significant upturn from the previous couple of years. Business travel has grown as companies increase their international presence in terms of their investments, supply and production chains and their customers. The rapid growth of global trade markets in goods and services and international investment have all contributed to growth in business travel. The domestic travel industry in the United States is typically a low cost, low fare environment. Most of the major airlines have undergone cost restructuring. Some airlines have sought the protection of Chapter 11 bankruptcy to restructure and reduce costs and then emerged as strong low-cost competitors. The majority have entered into cross-border alliances to improve......

Words: 1678 - Pages: 7

Premium Essay

Jetblue Airways

...JETBLUE AIRWAYS 2 JetBlue Airways What is JetBlue’s strategy for success in the marketplace? Does the company rely primarily on a customer intimacy, operational excellence, or product leadership customer value proposition? What evidence supports your conclusion? The strategy for JetBlue’s success in the marketplace is described in the company’s 10-K/A filling. Their goal is to ³establish JetBlue as a leading low-fare, low-cost passenger airline by offering customer’s high-quality customer service and a differentiated product.´ (JetBlue,2005) By doing this, they are trying to ³stimulate market demand while maintaining a continuous focus on cost-containment and operation efficiencies.´ (JetBlue, 2005) Based on the filing, JetBlue relies on product leadership customer value proposition. The four key elements to their strategy are: Stimulate demand with low fares Emphasize low operation costs Offer point to point flights to underserved and/or overpriced large markets Differentiate our product and service (JetBlue, 2005) Due to the strategies, JetBlue has been able to grow largely as a company and become one of the leading airlines which focus on customer satisfaction at a low operating cost. JETBLUE AIRWAYS 3 What business risks does JetBlue face that may threaten the company’s ability to satisfy stockholder expectations? What are some examples of control activities that the company could use to reduce these risks? (Hint: Focus on pages 17-23 of the 10-K/A.) As in...

Words: 933 - Pages: 4