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Case Study Analysis
Karen Pelletier
Geneice Bassue
Lee Dubois
James Lowe
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History of the Company Incorporated in 1998 in Delaware,
commenced service in 2000 -
primary base of operations at JFKin New York.
2002 - Operated 108 flights perday -- 52 daily flights between
JFK
and FL -- 26 daily flights betweenJFK and upstate NY -- 18
dailyflights between JFK and thewestern US.
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History of the Company 2002 - Stock trading just below $20
2004 - Revenues of $1.22 billion.
July 2005 - 52 week high was$26.40.
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Mission Statement
Jet Blues mission is to be the leading low-fare, low-cost
passenger airline offering high quality customerservice to
underserved markets and customer whoare looking for the best value
in their flight. We havethe newest most advanced planes that are
reliable,
fuel efficient, utilizes paperless cockpit technology,live
in-flight satellite TV and security cameras. Ourphilosophy is to
give customers the best price valuefor their ticket, offering
things our competitors dontoffer. At JetBlue we feel that hiring
educatedemployees that are highly motivated and well trainedwill
provide a better experience to the customers. We
feel that our high-value, high quality servicephilosophy will
lead the way to our becoming numberone in the industry.
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Vision Statement
At JetBlue our goal is to providethe best, most affordable
flight
experience of any air carrier whileproviding superior
service.
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JetBlues Goals
The companys goal has been toestablish itself as a leading
low-fare, low-cost passenger airline by offering
customers high-quality customer serviceand differentiated
products.
They focus on serving underservedmarkets and large metropolitan
areasthat have high average fares with adiversified geographical
flight schedulethat includes both short and long haulroutes.
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I
ssues at Hand Rising Fuel Costs
Labor Unions
Lots of competition
Not-well-known airline.
Cutting costs while increasing
revenues and profits.
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R
ankings #6 in Worlds Top Low Cost
Carriers by Net Profit, 2004
#4 in Worlds Top Low CostCarriers by Load Factor, 2005
#4 in Most Profitable Airlines, 2004($47.5 million)
#3 in Most Admired U.S. Airlines,2006
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Ex
ternal AuditOpportunities:
Increasing demand for air travel.
Untapped international market.
All other airlines that have much higher fares.
Other airlines who have been hurting since 9-11 and heading for
Chapter 11.
Increasing use of the Internet.
Potential use of luggage-tracking technology.
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Ex
ternal AuditThreats:
Many airlines including JetBlue face union laborcontracts.
Unions can strike whenever no agreements aremade.
Fuel costs are high and are a HUGE part ofairline expenses.
Breakeven load factor is rising.
Higher security required at airports is causing
higher fees on tickets and more customerdissatisfaction.
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Competitive ProfileM
atrix
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External FactorEvaluation Matrix
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Balance Sheet
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Income Statement
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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.
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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 $$.
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Internal FactorEvaluation Matrix
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FinancialR
atios 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
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SWOTMatrix
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SWOTMatrix
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SPACEMatrix
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SPACEMatrix
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Quantitative Strategic Planning Matrix
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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 for3 planes, fuel for a
year and maintenance costs.
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Alternative Strategies
Increase Advertising and Expand toOther Media
JetBlue could advertise on TV, Radio, and Onlineto boost
revenues and popularity of the airline.
This is an example of Market Penetration.
Cost:About $4,000,000.
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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 booka flight through JetBlue all
while comparing
prices from other airlines.
This is an example of Related Diversification.
Cost:About $30,000 to start off, thenabout $60,000 per year to
maintain (for asmall site).
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Recommendations for
JetBlueJetBlue should implement these strategies in
threestages.
-Introductory Phase Implement new advertisingcampaigns to get
JetBlues name known.
- Middle Phase Start the travel website to helpattract new
people to JetBlue, get them to fly, andbuild a reputation.
- End Phase Start flying internationally. Oncecustomers know
JetBlue and JetBlue gains areputation for high quality and low
prices, peoplewill want to fly them no matter where they go.
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References
http://www.aa.com/content/images/amrcorp/amrcorp2004ar.pdf
http://www.aa.com/content/images/amrcorp/amrcorp2004ar.pdf
http://www.tampaairport.com/about/facts/activity_reports/2005/marketshare_jan2005.pdf
http://library.corporate-ir.net/library/13/131/131045/items/211507/200410k.pdf
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Recommendations for
JetBlue
