Jetblue Airways Ipo Case

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Executive Summary Outlined in this analysis is the underwriting process for Jetblue Airways IPO as well as a description of the steps taking, and lastly the valuations for this IPO based on financial and non-financial information. JetBlue Airways is an innovative 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 unique and new aircrafts that had leather seating free Live TV in every seat, pre-assigned seating, reliable performance and simple low fares. In this study we analyzed the value of debt of the firm to help us compare the effects of percent changes of price per share in relation to growth as well as the percent change in price per share in relation to cost of equity. We found that Cost of Equity has a much larger impact on PPS than Growth. Therefore JetBlue should be much more concerned about the cost at which they issue the equity than the growth they expect to receive from new investments. From this finding we suggested keeping the number of planes the same because when we analyzed the trailing EPS of .51 and the forward EPS of 1.5, we see this generous increase may come from increased amount of assets available after an IPO. After we found this key point we compared the relative forward stock price of $43.19 and the price per share price valuation of $65.63 to derive our final recommendation for the IPO stock price offering of $54.41. Our range of prices for the IPO would be between $53-55. In regards to Jetblue’s aggressive growth plans, we hope that you find our conclusions justified and that our final IPO offering price be sufficient enough to generate the desired level of investor buzz. The IPO Process Before Jetblue initiated the IPO process we needed to construct a credible business plan, select our management team with

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