Jet Blue Case

JETBLUE AIRWAYS IPO VALUATION ² A CASE STUDY

Group Presentation By :

23 July 2011

CONTENTS

1. Introduction 2. Company and Industry Background 3. Going Public 4. The IPO Process 5. JetBlue Valuation 6. Recommendation 7. What happened

INTRODUCTION

Following the terrorist attacks of 9/11, the airline industry was in the doldrums. Many of the largest carriers in the nation had filed for bankruptcy protection and were asking the federal government for help so they could survive. Few people at this time considered the airline industry to be an extremely profitable venture, but where others saw despair, David Neeleman, CEO and founder of JetBlue Airways, saw opportunity. In 2002, after 2 years of profitable operations and less than a year after the attacks that shook the industry to its core, JetBlue Airways had its Initial Public Offering (IPO) and went public.

INTRODUCTION

This case study outlines the IPO underwriting process and uses JetBlue as an example to describe the steps throughout the way. In the following presentation, we will discuss the followings : The Company and Industry Background  Pros and Cons of going public  IPO process  JetBlue Valuation  Recommendation

THE COMPANY & INDUSTRY BACKGROUND

JetBlue airways are a low cost airline established in July 1999 by David Neeleman. David Neeleman was experienced in the operations of airlines and start up airlines.  He started Morris Air which became a pioneer in ticketless travel which was later acquired by Southwest Airlines.  Later he joined Canadian low fare airline West Jet.  He also developed the e-ticket system Open Skies which was purchased by Hewlett-Packard in 1999. The airline was to provide new levels of service in the airline travel industry, concentrating on customer service and low fares. The starting of new airlines had proven to be a very difficult task over the past twenty years, with 87 new start up airlines failing over the twenty year period.

THE COMPANY...