Jet Blue Case

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JetBlue Airways IPO Individual Case February 5, 2013 JetBlue Airways, IPO Valuation Statement of problem JetBlue airways are a low cost airline established in July 1999 by David Neeleman. Neeleman, was very experienced in the operations of airlines and start up airlines, having previously started his own small airline company. JetBlue Airways is a new and low-fare airline that promised to “bring humanity” to air travel back in 1999. Their primary goal was provide high-quality customer service for passengers flying in new aircrafts that had leather seating, reliable performance and simple low fares. JetBlue in April 2002 thought that it needed to raise equity by issuing an IPO in order to allow the company to expand. JetBlue was planning to go public in 2002 and was having trouble deciding what its stock price should be. One of the main advantages of a company going public is the additional capital the company can gain. With going public, JetBlue, may raise substantially more capital than it would raise through other options, such as debt financing or private sources. Another huge benefit of IPO’s is that the capital raised from going public does not have to be repaid. It serves also as a means of attracting and retaining quality personnel. A company with publicly traded stock has a powerful tool to attract and retain staff. Employees that own stock in the company often have a strong incentive to act in its best interest in order to gain a return on their investment. The stock of a public company can be used to finance future acquisitions, which is important for the long-term strategy plans for l expansion or other strategic opportunities. Just as there are benefits to going public, there are high costs associated with it as well. First off being that an IPO is expensive. The underwriter’s commission is typically around 7 percent of the total
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