JetBluePPt_Finanzas

7/30/2019 JetBluePPt_Finanzas

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Case Study AnalysisTeam #6


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History of the Company

Incorporated in 1998 in Delaware,commenced service in 2000 -primary base of operations at JFK

in New York. 2002 - Operated 108 flights per

day -- 52 daily flights between JFKand FL -- 26 daily flights between

JFK and upstate NY -- 18 dailyflights between JFK and thewestern US.


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History of the Company 2002 - Stock trading just below

$20

2004 - Revenues of $1.22 billion.

July 2005 - 52 week high was$26.40.


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Mission Statement Jet Blues mission is to be the leading low-fare, low-cost passenger airline offering high quality customerservice to underserved markets and customer whoare looking for the best value in their flight. We havethe newest most advanced planes that are reliable,fuel efficient, utilizes paperless cockpit technology,live in-flight satellite TV and security cameras. Ourphilosophy is to give customers the best price valuefor their ticket, offering things our competitors dontoffer. At JetBlue we feel that hiring educatedemployees that are highly motivated and well trained

will provide a better experience to the customers. Wefeel that our high-value, high quality servicephilosophy will lead the way to our becoming thenumber one in the industry.


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Vision Statement

At JetBlue our goal is to provide

the best, most affordable flightexperience of any air carrier whileproviding superior service.


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JetBlues Goals The companys goal has been to

establish itself as a leading low-fare, low-cost passenger airline by offering

customers high-quality customer serviceand differentiated products.

They focus on serving underservedmarkets and large metropolitan areas

that have high average fares with adiversified geographical flight schedulethat includes both short and long haulroutes.


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Issues at Hand

Rising Fuel Costs

Labor Unions Lots of competition

Not-well-known airline.

Cutting costs while increasingrevenues and profits.


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Rankings #6 in Worlds Top Low Cost

Carriers by Net Profit, 2004

#4 in Worlds Top Low CostCarriers by Load Factor, 2005

#4 in Most Profitable Airlines, 2004

($47.5 million) #3 in Most Admired U.S. Airlines,

2006


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External AuditOpportunities:

Increasing demand for air travel.Untapped international market.

All other airlines that have much higher fares.

Other airlines who have been hurting since 9-

11 and heading for Chapter 11.Increasing use of the Internet.

Potential use of luggage-tracking technology.


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External AuditThreats:

Many airlines including JetBlue face union laborcontracts.

Unions can strike whenever no agreements aremade.

Fuel costs are high and are a HUGE part of

airline expenses.

Breakeven load factor is rising.

Higher security required at airports is causing

higher fees on tickets and more customerdissatisfaction.


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Competitive Profile Matrix


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External Factor Evaluation

Matrix


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Income Statement


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Internal AuditStrengths:Low fares compared to other airlines.

Superior customer service.

Low labor wages that save them money.

More efficient and reliable planes.

Only airline to offer live TV in-flight.

High commitment to hiring better employees.Through their current workings, they are able to

build good brand loyalty.


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Internal Factor EvaluationMatrix


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Financial Ratios Current Ratio --> 1.06

Quick Ratio --> 1.08

Accounts Rec. Turnover --> 33.08 Debt to Equity --> 2.04

GPM --> 0.37

Return on Assets --> 0.02

EPS --> 45.55

LT Debt to Equity --> 0.65

Interest Earned --> 2.53


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SWOT


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SWOT


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SPACE Matrix


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SPACE Matrix


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Quantitative Strategic Planning Matri


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Alternative Strategies

Fly Internationally

Extend flights to major hubs in Europe to start

off, then as that takes off, offer flights to Asia,Australia, etc.

This is an example of Market Development

Cost: $100,000,000 for 3 planes, fuel for ayear and maintenance costs.


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Alternative StrategiesIncrease Advertising and Expand to

Other MediaJetBlue could advertise on TV, Radio, and Online

to boost revenues and popularity of the airline.

This is an example of Market Penetration.

Cost:About $4,000,000.


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Alternative StrategiesBuild Partnership Travel Website.

Build a website where users can look upinformation about different travel destinations,find hotels, restaurants, hot spots, etc, and booka flight through JetBlue all while comparing

prices from other airlines.This is an example of Related Diversification.

Cost:About $30,000 to start off, thenabout $60,000 per year to maintain (for asmall site).


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Recommendations for

JetBlueJetBlue should implement these strategies in threestages.

-Introductory Phase Implement new advertising

campaigns to get JetBlues name known.- Middle Phase Start the travel website to helpattract new people to JetBlue, get them to fly, andbuild a reputation.

- End Phase Start flying internationally. Once

customers know JetBlue and JetBlue gains areputation for high quality and low prices, peoplewill want to fly them no matter where they go.


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References http://www.aa.com/content/images/amrcorp/amrcor

p2004ar.pdf

http://www.aa.com/content/images/amrcorp/amrcorp2004ar.pdf

http://www.tampaairport.com/about/facts/activity_reports/2005/marketshare_jan2005.pdf

http://library.corporate-ir.net/library/13/131/131045/items/211507/200410k.pdf

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JetBluePPt_Finanzas

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