Introduction
The launch of JetBlue Airways in July 1998 was as a result of the challenges that people faced when using other flights. David Neeleman believed that there was no humility in air transport and thus thought that JetBlue Airways would fill the gap and eliminate the inefficiencies that were common in this industry. His experience at Southwest Airlines enabled him to identify the weaknesses of this mode of transport and establish effective strategies for eliminating them.
The 1997 inflation affected most international airlines and forced them to compromise the quality of their services. In addition, the company continued to expand and generate reasonable profits despite the 2001 terrorist attacks that affected the operations of most international airlines.
This company faced serious challenges when it decided to issue its first IPO. There were serious problems in determining the market values of its shares. However, consultations enabled the management to establish a plan that attracted potential shareholders by conducting a two-week roadshow campaign aimed at persuading the public to buy its shares. Therefore, it was not a surprise when the public oversubscribed to buy its shares when they were floated.
In addition, the debates between the management, media houses, and financial analysts enabled the company to set a reasonable price for its shares. Moreover, the public debate regarding the expectations of this company motivated people to invest in its shares. However, it was not easy to decide the best price for the share because most companies offer a range of between $ 22 and $24. This company decided to place its value at $26 and the results were surprising because there public interests in its shares was unexpected
Company Background
This is a passenger airline company that was incorporated in 1998 and offers point-to-point flights. It has the third-largest fleet that consists of 120 airbuses (A320) and 49 (EMBRAER 190) aircraft. JetBlue has offices in more than 20 countries and operates in 70 destinations located in different places, especially in America. It is necessary to explain that the management of this company focused on establishing its destinations in major cities like New York; moreover, this is a place that has it’s headquartered.
Its performance report shows that this company operated about 700 flights per day in 2011. This year was very productive because JetBlue acquired eight slots (take-off and landing) in the world’s largest and busiest airports (New York-LaGuardia Airport and Washington-Ronald Reagan National Airport).
JetBlue specializes in passenger flights and its United States branch is considered to be its major destination point that generates huge profits for the company. Its entertainment system is classic and very few companies can rival it in the provision of modern DirecTV and free XM channels. In addition, its XM channels are free and customers do not have to worry about serbvic9ing them because the charges are included in the air tickets.
This company is known for offering branded snacks and beverages and this is believed to be the main reason why its clients prefer it to its competitors. In addition, customers do not have to worry about their overnight flights because this company allows them to buy food and drinks from the available selections. The single class arrangement of its leather seats in the airbuses offers comfort, privacy, and entertainment services that can only be enjoyed in JetBlue flights. It is Airbus A320 has a capacity of 150 passengers and each of their seats is fitted with communication devices that enable them to be in regular contact with the attendants whenever there is a need to do so.
The EMBRAER 190 has a two-by-two sitting configuration and each row has 25 leather seats. During 2011, the company serves seven airports including Westchester, White Plains, Stewart, Liberty, LaGuardia, and John F. Kennedy and it had 17 landing spots in Boston. It has improved its service delivery by selling its packages through JetBlue Gateways which is a website designed to enable customers to book their flights, access accommodation, and car rental services.
It has a subsidiary called LiveTV, LLC that offers in-flight entertainment, voice communication, and data services for business and aviation aircraft that enabled this company to generate total revenues of $4,504, 000, $3,779,000, and $3,292,000 in 2011, 2010, and 2009 respectively. This subsidiary has business agreements with six other airlines (local and international) for offering hardware and software installation, entertainment, data, and voice communication and maintenance of its services. The availability of voice and data communication services enables the clients of this company to enjoy their trips to various destinations.
The success and achievements of this company are believed to originate from its decision to offer cheap low-cost air travel to people who are always busy moving from one major city to another. The 2002 road-show conducted for two days to market its IPO prospectus of raising additional funds was a major success. It conducted closed-door meetings with its stakeholders that lasted for two weeks to decide the price of its new share.
The pricing policy of its shares became a hot issue that attracted the attention of the public, media houses, and financial analysts. The discussions that followed placed the price at $5.89 per share. The response was overbearing as the company received oversubscription that allowed it to generate additional funds within a short time. It issued 5.5 million shares that were floated in the local and international markets to ensure the company offsets its losses of venture capital investors. The company established an effective campaign that its competitors have never used in promoting its popularity.
The two weeks roadshow enabled this company to interact with its customers and other stakeholders. This was an excellent opportunity to discuss its policies, performance, and future to ensure the public understands it. In addition, it is necessary to explain that this company introduced a new share pricing dimension that enabled it to generate extra funds without inconveniencing the existing shareholders. This explains why the public expressed unwavering interest in its shares and oversubscribed to it.