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Jetblue Ipo Case Study

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| 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.
Within seven months, JetBlue initiated flying using Airbus A320 from JFK to Fort Lauderdale, Florida and Buffalo New York. By late summer 2000, more routes were added and continued growing rapidly. By early 2002 was operating 24 aircraft flying 108 flights per day to 17 destinations. JetBlue focused on point-to-point service to large metropolitan areas with high average fares. Their operation…...

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