Case Study Analysis
Karen Pelletier
Geneice Bassue
Lee Dubois
James Lowe
History of the Company
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Incorporated in 1998 in Delaware,
commenced service in 2000 primary base of operations at JFK
in New York.
2002 - Operated 108 flights per
day -- 52 daily flights between JFK
and FL -- 26 daily flights between
JFK and upstate NY -- 18 daily
flights between JFK and the
western US.
History of the Company
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2002 - Stock trading just below $20
2004 - Revenues of $1.22 billion.
July 2005 - 52 week high was
$26.40.
Mission Statement
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Jet Blue’s mission is to be the leading low-fare, lowcost passenger airline offering high quality customer
service to underserved markets and customer who
are looking for the best value in their flight. We have
the newest most advanced planes that are reliable,
fuel efficient, utilizes paperless cockpit technology,
live in-flight satellite TV and security cameras. Our
philosophy is to give customers the best price value
for their ticket, offering things our competitors don’t
offer. At JetBlue we feel that hiring educated
employees that are highly motivated and well trained
will provide a better experience to the customers. We
feel that our high-value, high quality service
philosophy will lead the way to our becoming the
number one in the industry.
Vision Statement
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At JetBlue our goal is to provide
the best, most affordable flight
experience of any air carrier while
providing superior service.
JetBlue’s Goals
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“The company’s goal has been to
establish itself as a leading low-fare, lowcost passenger airline by offering
customers high-quality customer service
and differentiated products. “
They focus on serving underserved
markets and large metropolitan areas
that have high average fares with a
diversified geographical flight schedule
that includes both short and long haul
routes.
Issues at Hand
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Rising Fuel Costs
Labor Unions
Lots of competition
Not-well-known airline.
Cutting costs while increasing
revenues and profits.
Rankings
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#6 in World’s Top Low Cost
Carriers by Net Profit, 2004
#4 in World’s Top Low Cost
Carriers by Load Factor, 2005
#4 in Most Profitable Airlines, 2004
($47.5 million)
#3 in Most Admired U.S. Airlines,
2006
External Audit
Opportunities:
Increasing demand for air travel.
Untapped international market.
All other airlines that have much higher fares.
Other airlines who have been hurting since 911 and heading for Chapter 11.
Increasing use of the Internet.
Potential use of luggage-tracking technology.
External Audit
Threats:
Many airlines including JetBlue face union labor
contracts.
Unions can strike whenever no agreements are
made.
Fuel costs are high and are a HUGE part of
airline expenses.
Breakeven load factor is rising.
Higher security required at airports is causing
higher fees on tickets and more customer
dissatisfaction.
Competitive Profile Matrix
External Factor Evaluation Matrix
Balance Sheet
Income Statement
Internal Audit
Strengths:
Low fares compared to other airlines.
Superior customer service.
Low labor wages that save them money.
More efficient and reliable planes.
Only airline to offer live TV in-flight.
High commitment to hiring better employees.
Through their current workings, they are able to
build good brand loyalty.
Internal Audit
Weaknesses:
Low fares could mean less money being made,
less profits.
Much higher average airborne time and higher
% of diverted flights.
Smaller and more unheard of than any airline.
Fuel consumption, as a % of expenses, is rising
rapidly.
Very low percentage of full-time employees.
Extra bells and whistles could cost company $$.
Internal Factor Evaluation Matrix
Financial Ratios
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Current Ratio --> 1.06
Quick Ratio --> 1.08
Accounts Rec. Turnover --> 33.08
Debt to Equity --> 2.04
GPM --> 0.37
Return on Assets --> 0.02
EPS --> 45.55
LT Debt to Equity --> 0.65
Interest Earned --> 2.53
SWOT Matrix
SWOT Matrix
SPACE Matrix
SPACE Matrix
Quantitative Strategic Planning Matrix
Alternative Strategies
Fly Internationally
Extend flights to major hubs in Europe to start off,
then as that takes off, offer flights to Asia,
Australia, etc.
This is an example of Market Development
Cost: $100,000,000 for 3 planes, fuel for a
year and maintenance costs.
Alternative Strategies
Increase Advertising and Expand to
Other Media
JetBlue could advertise on TV, Radio, and Online
to boost revenues and popularity of the airline.
This is an example of Market Penetration.
Cost: About $4,000,000.
Alternative Strategies
Build Partnership Travel Website.
Build a website where users can look up
information about different travel destinations,
find hotels, restaurants, hot spots, etc, and book
a flight through JetBlue all while comparing
prices from other airlines.
This is an example of Related Diversification.
Cost: About $30,000 to start off, then
about $60,000 per year to maintain (for a
small site).
Recommendations for
JetBlue
JetBlue should implement these strategies in three
stages.
-Introductory Phase – Implement new advertising
campaigns to get JetBlue’s name known.
- Middle Phase – Start the travel website to help
attract new people to JetBlue, get them to fly, and
build a reputation.
- End Phase – Start flying internationally. Once
customers know JetBlue and JetBlue gains a
reputation for high quality and low prices, people
will want to fly them no matter where they go.
References
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http://www.aa.com/content/images/amrcorp/amrcor
p2004ar.pdf
http://www.aa.com/content/images/amrcorp/amrcor
p2004ar.pdf
http://www.tampaairport.com/about/facts/activity_re
ports/2005/marketshare_jan2005.pdf
http://library.corporateir.net/library/13/131/131045/items/211507/200410k
.pdf
Recommendations for
JetBlue