JetBlue Case 
JetBlue Airways IPO Valuation
Background Started in 1999 with the promise to “bring humanity to air travel,” JetBlue entered the “Discount Fare Airlines” to join the likes of Southwest, ATA, Frontier and others (Bruner 2002). With a strong and experienced management team, having Continental Airlines’ former vice-president as president and COO, and Southwest Airlines’ former executive vice-president and treasurer as CFO, David Neeleman believed that his new airline would thrive. Neeleman built JetBlue’s business model around the customer, and his primary goal was to fix everything that “sucked” about airline travel. JetBlue’s airplanes were new, and the airfares were low and simple. They offered free LiveTV at every seat, there was pre-assigned seating (which is different from most discount airliners), reliable performance, and high-quality customer service (Bruner 2002).
Southwest Airlines pioneered the low-fare airline market, and soon many other newcomers copied it, including JetBlue. This model centers on providing the customer with higher quality service, while taking measurers to minimize the costs where possible. The norm is to have one or few different types of airplanes, to minimize complexity and reduce maintenance and training costs. This model also counts on point-to-point service to secondary airports in major metropolitan areas. Other U.S. players in this industry were AirTran, America West, ATA, Frontier, and Ryanair.
JetBlue was able to deliver on the cost savings better than others in the industry as evidenced by its cost per available seat mile, which was 6.98 cents, while the industry averaged 10.08 cents. By early 2002, JetBlue operated 24 airplanes, flying 108 flights per day to 17 destinations (Bruner 2002). The company also believed in using advanced technology to help with its operations and was the first U.S. airline to secure cockpits with bulletproof Kevlar doors after the September 11th hijackings (Bruner 2002). The
Background Started in 1999 with the promise to “bring humanity to air travel,” JetBlue entered the “Discount Fare Airlines” to join the likes of Southwest, ATA, Frontier and others (Bruner 2002). With a strong and experienced management team, having Continental Airlines’ former vice-president as president and COO, and Southwest Airlines’ former executive vice-president and treasurer as CFO, David Neeleman believed that his new airline would thrive. Neeleman built JetBlue’s business model around the customer, and his primary goal was to fix everything that “sucked” about airline travel. JetBlue’s airplanes were new, and the airfares were low and simple. They offered free LiveTV at every seat, there was pre-assigned seating (which is different from most discount airliners), reliable performance, and high-quality customer service (Bruner 2002).
Southwest Airlines pioneered the low-fare airline market, and soon many other newcomers copied it, including JetBlue. This model centers on providing the customer with higher quality service, while taking measurers to minimize the costs where possible. The norm is to have one or few different types of airplanes, to minimize complexity and reduce maintenance and training costs. This model also counts on point-to-point service to secondary airports in major metropolitan areas. Other U.S. players in this industry were AirTran, America West, ATA, Frontier, and Ryanair.
JetBlue was able to deliver on the cost savings better than others in the industry as evidenced by its cost per available seat mile, which was 6.98 cents, while the industry averaged 10.08 cents. By early 2002, JetBlue operated 24 airplanes, flying 108 flights per day to 17 destinations (Bruner 2002). The company also believed in using advanced technology to help with its operations and was the first U.S. airline to secure cockpits with bulletproof Kevlar doors after the September 11th hijackings (Bruner 2002). The