Jetblue Case Essay

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IPO is the first sale of shares to the public by a private company like JetBlue. Whether going public is very important because JetBlue can obtain large amount of capital to fund its growth and expansion (i.e. purchase new aircrafts) and to offset the portfolio losses by the venture-capital investors, and JetBlue can also be able to get potential future benefits (e.g. quickly raising large funds from the public and obtain favourable terms from debtors) from listing by changing the debt to equity ratio. Meanwhile, going public can also increase the publicity of JetBlue and attract more potential customers, which may result in a greater market share of JetBlue in the airline industry. For founding individuals of JetBlue, its IPO may be an opportunity to increase their liquidity. At the same time, disadvantages arise when JetBlue goes public. Before going public, JetBlue needs to solicit approval from SEC, which monitors listed firms to ensure they obey all the rules and regulations, for instance, JetBlue is required to make adequate disclosure to investors and the like. And the costs of complying and some additional costs such as audit fees can be very high, especially for small firms. Furthermore, if the IPO fails JetBlue will lose money. This makes the IPO process time consuming and expensive. Finally, the future benefits of being listed are not guaranteed. After weighting the costs and benefits of going public, in my opinion, private placement would be a better idea for JetBlue to raise funds particularly following the terrorist attacks of September 2001, because private placement is less expensive, less time consuming and do not need for registration, and at the same time, JetBlue can also raise funds quickly through private placement. At that time, the whole economy slowed down and it was hard for JetBlue or any other firms to perform well, the price

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