Jetblue-Airways-Ipo Valuation Essay

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JetBlue Airways IPO Valuation Executive summary In summary, the report analyse the IPO valuation of JetBlue Airways. It is found that the economy at the time JetBlue issuing shares was in a bad economic condition that is not suitable for an IPO offering. However one important point was found that the low-fare airline had been performing well over the past, even during tough time period, while other airline majors is losing. This might explain the reason why JetBlue chose to go IPO. A SWOT analysis was conducted and it can be seen that JetBlue have many strengths and opportunities that can overcome its weaknesses and threads. Finally, the share price is calculated as $4.23. This is over pricing for which company decided a range from $20 to $22. Company should lower the price. Overview of Airline industry late 1990s -early 2000s Before the September 11 hijacking event, the Aviation industry was experiencing deregulation, and this resulted in many problems. Based on the research, U.S. airlines were deregulated in 1978 (Dempsey 2008). Theoretically, regulation would be a factor that contributes to the poor financial results for the airline industry. However the fact is that the financial performance of the industry has grown overwhelmingly worse since deregulation (Dempsey 2008). According to Dempsey’s research (2008), U.S. airline industry had made a huge lost on profit, by the end of 1991. It was recovered in late 1990s, but once again, the industry suffer a bigger loss in early 2000s (Dempsey 2008). This second drop of profit is probably due to the September 11 terrorist attack. The impact of the September 11 was a loss in revenue of U.S. airline of $19.6 billion in 2001-2002 (IATA). From 2011 to 2005, a total loss was $57.7 billion (IATA). Overall, the U.S. aviation industry was in a really bad situation. Why going public (IPO) Initial public offering

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