Jetblue Case Analysis

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I. KEY ISSUE In 2007, the CEO of JetBlue Airways, David Barger, faced an immediate survival issue as the company struggled to overcome a major operational failure during a difficult time in the airline industry when fuel prices were increasing tremendously and the profitability levels were low. Barger knew he should move quickly to maintain the confidence of customers, employees, and shareholders. He considered the option of reducing either E190 or A320 deliveries in order to maintain low costs as the company was not ready to continue growth in the E190 regional market segment. II. ANALYSIS 1. INTERNAL ANALYSIS (a) VRINE Model Resource 1: Embraer’s E190 Valuable- E190 increased growth opportunities for JetBlue as the company could get access to a larger potential market via E190. It was more comfortable than typical regional jet. Cost per available seat of E190 was 34% less than a typical regional jet. Breakeven point was much lower on the E190 than the A320. Rare- JetBlue was the launch customer for the E190 and Embraer had limited capacity to produce it in one year, so not many airlines had E190 until now. Inimitable- JetBlue played significant role in the design of the E190, allowing them to customize the plane to their specifications Not Substitutable- Elasticity of substitutions of the E190 varies on the consumer preferences. Exploitable- JetBlue could design the interior of the aircraft to improve passenger comfort and use E190 as an useful tool to expand market and attract new customers. Implication: The E190 provided a unique opportunity for the growth of JetBlue. However, this plane did not completely match the company’s current capabilities and costed a lot. Thus the CEO of Jetblue must change their strategic strategy to either keep E190 as a VRINE resource or sell it. Capability 1: High level of service (Bill of Rights) Valuable-

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