Case Study Analysis

Team #6

History of the Company Incorporated in 1998 in Delaware,

2002 - Operated 108 flights per

commenced service in 2000 primary base of operations at JFK in New York. day -- 52 daily flights between JFK and FL -- 26 daily flights between JFK and upstate NY -- 18 daily flights between JFK and the western US.

History of the Company

2002 - Stock trading just below

$20

2004 - Revenues of $1.22 billion. July 2005 - 52 week high was

$26.40.

Mission Statement

Jet Blues mission is to be the leading low-fare, lowcost passenger airline offering high quality customer service to underserved markets and customer who are looking for the best value in their flight. We have the newest most advanced planes that are reliable, fuel efficient, utilizes paperless cockpit technology, live in-flight satellite TV and security cameras. Our philosophy is to give customers the best price value for their ticket, offering things our competitors dont offer. At JetBlue we feel that hiring educated employees that are highly motivated and well trained will provide a better experience to the customers. We feel that our high-value, high quality service philosophy will lead the way to our becoming the number one in the industry.

Vision Statement

At JetBlue our goal is to provide

the best, most affordable flight experience of any air carrier while providing superior service.

JetBlues Goals
The
companys goal has been to establish itself as a leading low-fare, lowcost passenger airline by offering customers high-quality customer service and differentiated products.
focus on serving underserved markets and large metropolitan areas that have high average fares with a diversified geographical flight schedule that includes both short and long haul routes.

They

Issues at Hand

Rising Fuel Costs Labor Unions Lots of competition Not-well-known airline. Cutting costs while increasing
revenues and profits.

Rankings

#6 in Worlds Top Low Cost

Carriers by Net Profit, 2004

#4 in Worlds Top Low Cost

Carriers by Load Factor, 2005

#4 in Most Profitable Airlines, 2004

($47.5 million)

#3 in Most Admired U.S. Airlines,

2006

External Audit
Opportunities:
Increasing demand for air travel. Untapped international market. All other airlines that have much higher fares. Other airlines who have been hurting since 911 and heading for Chapter 11.

Increasing use of the Internet.

Potential use of luggage-tracking technology.

External Audit
Threats:
Many airlines including JetBlue face union labor contracts. Unions can strike whenever no agreements are made. 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 customer dissatisfaction.

Competitive Profile Matrix

External Factor Evaluation Matrix

Balance Sheet

Income Statement

Internal Audit
Strengths:
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.

Internal Audit
Weaknesses:
Low fares could mean less money being made, less profits. Much higher average airborne time and higher % of diverted flights. Smaller and more unheard of than any airline. Fuel consumption, as a % of expenses, is rising rapidly. Very low percentage of full-time employees. Extra bells and whistles could cost company $$.

Internal Factor Evaluation Matrix

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

SWOT M

SWOT M

SPACE Matrix

SPACE Matrix

Quantitative Strategic Planning Matrix

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 a

year and maintenance costs.

Alternative Strategies
Increase Advertising and Expand to Other Media
JetBlue 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.

Alternative Strategies
Build Partnership Travel Website.
Build a website where users can look up information about different travel destinations, find hotels, restaurants, hot spots, etc, and book a flight through JetBlue all while comparing prices from other airlines. This is an example of Related Diversification.

Cost: About $30,000 to start off, then

about $60,000 per year to maintain (for a small site).

Recommendations for JetBlue

JetBlue should implement these strategies in three stages.
-Introductory Phase Implement new advertising campaigns to get JetBlues name known. - Middle Phase Start the travel website to help attract new people to JetBlue, get them to fly, and build a reputation. - End Phase Start flying internationally. Once customers know JetBlue and JetBlue gains a reputation for high quality and low prices, people will want to fly them no matter where they go.

References

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

http://www.aa.com/content/images/amrcorp/amrcor
http://www.tampaairport.com/about/facts/activity_re http://library.corporateports/2005/marketshare_jan2005.pdf
ir.net/library/13/131/131045/items/211507/200410k .pdf p2004ar.pdf

p2004ar.pdf