JetBlue Airways - 2009

Case Notes Prepared by: Dr. Mernoush Banton Case Author: Dr. Mernoush Banton

A.Case Abstract
JetBlue Airways www.!etblue."o#$ is a "o#prehensi%e strate&i" #ana&e#ent "ase that in"ludes the "o#pany's "alendar year-end De"e#ber 200( )inan"ial state#ents* "o#petitor in)or#ation and #ore. +he "ase ti#e settin& is the year 2009. ,u))i"ient internal and e-ternal data are pro%ided to enable students to e%aluate "urrent strate&ies and re"o##end a three-year strate&i" plan )or the "o#pany. .ead/uartered in 0orest .ills* New 1or2* JetBlue Airways is traded on the New 1or2 ,to"2 3-"han&e under ti"2er sy#bol JB45.

1. Vision Statement proposed$

Pro%idin& an entertainin& and "arin& air tra%el ser%i"e to our "usto#ers.

2. Mission Statement a"tual$

+he "o#pany's %alues are printed in their web site as: SAFETY Co##it to sa)ety )irst6 "o#ply with all re&ulatory a&en"ies6 set and #aintain hi&h standards6 ensure the se"urity and sa)ety o) "rew#e#bers and "usto#ers6 ne%er "o#pro#ise sa)ety. 7* 8* 9$ CARING Maintain respe"t)ul relationships with "rew#e#bers and "usto#ers6 stri%e to be a role #odel at wor2 and in the "o##unity6 e#bra"e a healthy balan"e between wor2 and )a#ily6 ta2e responsibility )or personal and "o#pany &rowth. 9$ INTEGRITY De#onstrate honesty* trust and #utual respe"t6 &i%e the JetBlue %alues a :heartbeat;6 ne%er "o#pro#ise the %alues )or short ter# results6 possess and de#onstrate broad business 2nowled&e6 "o##it to sel) i#pro%e#ent. <* 2* 8$ FUN 3-hibit a sense o) hu#or and the ability to lau&h at sel)6 add personality to the "usto#er e-perien"e6 de#onstrate and "reate enthusias# )or the !ob6 see2 to "on%ert a ne&ati%e situation into a positi%e "usto#er e-perien"e6 "reate a )riendly en%iron#ent where ta2in& ris2s is o2ay. ($

Copyri&ht = 20<< Pearson 3du"ation* >n". publishin& as Prenti"e .all.

PASSION ,tri%e to #eet the di%erse needs o) "rew#e#bers and "usto#ers6 "ha#pion tea# spirit6 "ra%e and deli%er superior per)or#an"e6 loo2 )or inno%ati%e solutions to business issues. ?$ <. 2. @. ?. 9. 7. 8. (. 9. Custo#er Produ"ts or ser%i"es Mar2ets +e"hnolo&y Con"ern )or sur%i%al* pro)itability* &rowth Philosophy ,el)-"on"ept Con"ern )or publi" i#a&e Con"ern )or e#ployees

E!terna" A#$it
O%%ort#nities
<. 0uel pri"es ha%e been steady 2. Ather airlines ha%e raised their )ees )or )li&ht "han&e* ba&&a&e "he"2-in and other additional ser%i"es @. Additional airport se"urity relie)s airlines )or #aintainin& and installin& "ostly se"urity e/uip#ent ?. Bi-0i and other wireless de%i"es are under "onsideration by 0AA. 9. >n"rease in passen&er's de#and )or sa)ety* better "usto#er ser%i"e* "o#)ort and entertain#ent when tra%elin& 7. >n"rease in international tra%el #ar2et 8. ,#aller airlines #ay &o out o) business

T&reats
<. Bea2 e"ono#y "ausin& drop in business and leisure 2. >n"rease in operatin& e-penses due to additional "ost in labor "ontra"ts and other &eneral and ad#inistrati%e e-penses @. >n"rease in )uel "osts in the last )ew years whi"h "ould raise a&ain ?. ,e"urity threats su"h as terroris# 9. >n"rease in se"urity "har&es by +,A "ausin& in"rease in ti"2et pri"e 7. Mer&er a#on& airlines 8. >n"rease in )ederal ta-es

CPM ' Com%etiti(e Pro)i"e Matri!

*et+"#e
Critica" S#ccess Factors -ei.& t Ratin . -ei.&te $ Score Ratin .

AMR
-ei.&te $ Score

So#t&,est
Ratin . -ei.&te$ Score

Ad%ertisin& ,er%i"e C Produ"t Duality

0.<0 0.08

2 ?

0.20 0.2(

? 2

0.?0 0.<?

@ @

0.@0 0.2<

Copyri&ht = 20<< Pearson 3du"ation* >n". publishin& as Prenti"e .all.

Pri"e Mana&e#ent 0inan"ial Position Custo#er 4oyalty Produ"t 4ines Mar2et ,hare Custo#er ,er%i"e ,a)ety +e"hnolo&y 3#ployees Elobal 3-pansion Tota"

0.0( 0.09 0.09 0.<0 0.<0 0.07 0.0( 0.0( 0.<0 0.09 0.0? 1.//

@ 2 < @ @ < @ @ ? @ 2

0.2? 0.<0 0.09 0.@0 0.@0 0.07 0.2? 0.2? 0.?0 0.<9 0.0( 2.01

2 < 2 2 ? ? 2 < 2 2 ?

0.<7 0.09 0.<( 0.20 0.?0 0.2? 0.<7 0.0( 0.20 0.<0 0.<7 2.23

? @ @ ? 2 2 ? 2 @ ? <

0.2? 0.<9 0.28 0.?0 0.20 0.<2 0.@2 0.<7 0.@0 0.20 0.0? 2.41

E!terna" Factor E(a"#ation 5EFE6 Matri!

7e8 E!terna" Factors

O%%ort#nities

-ei.&t

Ratin.

-ei.&te$ Score

<.

0uel pri"es ha%e been steady

0.07 0.07

@ @

0.<( 0.<(

2. Ather airlines ha%e raised their )ees )or )li&ht "han&e* ba&&a&e "he"2-in and other additional ser%i"es @. Additional airport se"urity relie)s airlines )or #aintainin& and installin& "ostly se"urity e/uip#ent ?. Bi-0i and other wireless de%i"es are under "onsideration by 0AA. 9. >n"rease in passen&er's de#and )or sa)ety* better "usto#er ser%i"e* "o#)ort and entertain#ent when tra%elin& 7. >n"rease in international tra%el #ar2et 8. ,#aller airlines #ay &o out o) business
T&reats

0.0@

0.07

0.09 0.<

< ?

0.09 0.?

0.< 0.07

< <

0.< 0.07

Copyri&ht = 20<< Pearson 3du"ation* >n". publishin& as Prenti"e .all.

<. Bea2 e"ono#y "ausin& drop in business and leisure 2. In"rease in operatin& e-penses due to additional "ost in labor "ontra"ts and other &eneral and ad#inistrati%e e-penses @. >n"rease in )uel "osts in the last )ew years whi"h "ould raise a&ain ?. ,e"urity threats su"h as terroris# 9. >n"rease in se"urity "har&es by +,A "ausin& in"rease in ti"2et pri"e 7. Mer&er a#on& airlines 8. >n"rease in )ederal ta-es

0.< 0.0(

2 @

0.2 0.2?

0.09 0.09 0.07 0.09 0.0@ 1

@ @ @ < 2

0.28 0.28 0.<( 0.09 0.07 2.:2

TOTA9

E.

Interna" A#$it
Stren.t&s
<. 2. @. ?. 9. 7. 8. (. 9. <0. <<. <2. ,tron& "usto#er loyalty >n"rease in >nternet ti"2etin& "ausin& other operational "osts to be lower Chan&e in C3A Fan2ed nu#ber 8 by tra))i" in 5.,. #ar2et New roo#y leather seat air"ra)ts +he only airline o))erin& )ree Dire"+G and HM satellite radio on e%ery seat Fe"ently started new destinations sele"ted "ountries in the Caribbean and 4atin A#eri"a +he only airline o))er Custo#er Bill o) Fi&hts >n 200(* JetBlue "o#pleted 9(.?I o) their s"heduled )li&hts on ti#e 4aun"hed Jetblue."o# in ,panish Partnership with A#eri"an 3-press "redit "ard Apened the state o) the art hub in J0J* New 1or2

-ea;nesses
<. 2. @. ?. 9. 7. 8. Pro)itability is de"linin& due to hi&her )uel "ost +ra%els to li#ited destinations ,to"2 pri"es ha%e dropped o%er the years <@.89I drop in "urrent assets )ro# 2008 to 200( >n"rease in lon& ter# liabilities 5ses third party )uel #ana&e#ent ser%i"e )or hed&in& May not be able to raise "apital due to low #ar2et "ap
Copyri&ht = 20<< Pearson 3du"ation* >n". publishin& as Prenti"e .all.

Financia" Ratio Ana"8sis A"tober 2009$

Gro,t& Rates < ,ales Dtr %s year a&o /tr$ Net >n"o#e 1+D %s 1+D$ Net >n"o#e Dtr %s year a&o /tr$ ,ales 9-1ear Annual A%&.$ Net >n"o#e 9-1ear Annual A%&.$ Di%idends 9-1ear Annual A%&.$ Price Ratios Current PC3 Fatio PC3 Fatio 9-1ear .i&h PC3 Fatio 9-1ear 4ow Pri"eC,ales Fatio Pri"eCBoo2 Galue Pri"eCCash 0low Fatio Pro)it Mar.ins < Eross Mar&in Pre-+a- Mar&in Net Pro)it Mar&in 91r Eross Mar&in 9-1ear A%&.$ 91r Pre+a- Mar&in 9-1ear A%&.$ 91r Net Pro)it Mar&in 9-1ear A%&.$ Financia" Con$ition DebtC3/uity Fatio Current Fatio Dui"2 Fatio >nterest Co%era&e 4e%era&e Fatio Boo2 GalueC,hare
Adapted )ro# www.#oney"entral.#sn."o#

*et+"#e -6.10 NA 322.20 27.68 NA NA *et+"#e NA NA NA 0.92 <.<9 (.90 *et+"#e 22.0 0.< -0.9 2?.7 0.2 -0.@ *et+"#e 2.@0 <.< <.< <.< ?.? ?.9?

In$#str8 -8.00 6.20 114.20 22.95 3.73 4.82 In$#str8 ?9.2 9.7 0.9 <.<? <.7? <@.90 In$#str8 28.0 <.( <.@ 29.? (.9 7.8 In$#str8 <.<2 <.2 <.2 9.< @.9 (.(8

S=P >// -9.20 -4.80 -9.70 13.14 12.64 11.59 S=P >// @@.2 <7.0 2.7 <.92 ?.@2 <@.<0 S=P >// @8.( <0.0 7.( @8.9 <7.? <<.? S=P >// <.?< <.9 <.2 27.8 9.@ 2<.2<

A(. P?E <2C0( <2C08 -<9.20 <08.?0

Price? Sa"es 0.?8 0.@(

Price? +oo; <.9@ <.0@

Net Pro)it Mar.in 5<6 -2.2 0.7

Copyri&ht = 20<< Pearson 3du"ation* >n". publishin& as Prenti"e .all.

<2C07 <2C09 <2C0? <2C0@ <2C02 <2C0< <2C00 <2C99 <2C0(

-2000.(0 -<09.?0 9(.90 2(.?0 @@.20 NA NA NA -<9.20 ebt? E@#it8 2.90 2.9? 2.9( 2.99 2.09 <.79 <.82 2.<0 <.72 0.00

<.09 <.?9 2.0@ 2.9< 2.88 NA NA NA 0.?8 Ret#rn on E@#it8 5<6 -7.0 <.8 -0.< -2.2 7.< <9.9 <@.2 2<.7 -<9.9 NA

2.79 2.9< @.2< ?.0@ ?.<9 NA NA NA <.9@ Ret#rn on Assets 5<6 -<.@ 0.@ NA -0.9 <.8 ?.( ?.0 9.8 -7.2 NA

NA -<.2 @.8 <0.? 8.8 7.8 -@@.9 NA -2.2 Interest Co(era.e 0.7 0.9 0.9 0.9 2.9 8.< 7.8 ?.? -8.@ NA

<2C0( <2C08 <2C07 <2C09 <2C0? <2C0@ <2C02 <2C0< <2C00 <2C99

+oo; Va"#e? S&are K?.7? K9.8< K9.@7 K9.2( K?.(2 K?.@( K2.(9 K<2.<0 K8.?8 NA

Adapted )ro# www.#oney"entral.#sn."o#

Interna" Factor E(a"#ation 5IFE6 Matri!

7e8 Interna" Factors

Stren.t&s

-ei.&t

Ratin.

-ei.&te$ Score

<. ,tron& "usto#er loyalty 2. >n"rease in >nternet ti"2etin& "ausin& other operational "osts to be lower @. Chan&e in C3A ?. Fan2ed nu#ber 8 by tra))i" in 5.,. #ar2et 9. New roo#y leather seat air"ra)ts

0.0? 0.08 0.02 0.0@ 0.02

@ @ 2 ? 2

0.<2 0.2< 0.0? 0.<2 0.0?

Copyri&ht = 20<< Pearson 3du"ation* >n". publishin& as Prenti"e .all.

7. +he only airline o))erin& )ree Dire"+G and HM satellite radio on e%ery seat 8. Fe"ently started new destinations sele"ted "ountries in the Caribbean and 4atin A#eri"a (. +he only airline o))er Custo#er Bill o) Fi&hts 9. >n 200(* JetBlue "o#pleted 9(.?I o) their s"heduled )li&hts on ti#e <0. 4aun"hed Jetblue."o# in ,panish <<. Partnership with A#eri"an 3-press "redit "ard <2. Apened the state o) the art hub in J0J* New 1or2
-ea;nesses

0.07 0.0(

@ @

0.<( 0.2?

0.0@ 0.0( 0.0? 0.07 0.09

< @ 2 @ 2

0.0@ 0.2? 0.0( 0.<( 0.<

<. Pro)itability is de"linin& due to hi&her )uel "ost 2. @. years +ra%els to li#ited destinations ,to"2 pri"es ha%e dropped o%er the

0.08 0.09 0.08 0.0( 0.08 0.0@ 0.09 1

? @ 2 @ 2 < ?

0.2( 0.<9 0.<? 0.2? 0.<? 0.0@ 0.2 2.30

?. <@.89I drop in "urrent assets )ro# 2008 to 200( 9. >n"rease in lon& ter# liabilities

7. 5ses third party )uel #ana&e#ent ser%i"e )or hed&in& 8. May not be able to raise "apital due to low #ar2et "ap

TOTA9

F.

S-OT Strate.ies
Stren.t&s <. ,tron& "usto#er loyalty 2. >n"rease in >nternet -ea;nesses <. Pro)itability is de"linin& due to hi&her )uel "ost

Copyri&ht = 20<< Pearson 3du"ation* >n". publishin& as Prenti"e .all.

ti"2etin& "ausin& other operational "osts to be lower @. Chan&e in C3A ?. Fan2ed nu#ber 8 by tra))i" in 5.,. #ar2et 9. New roo#y leather seat air"ra)ts 7. +he only airline o))erin& )ree Dire"+G and HM satellite radio on e%ery seat 8. Fe"ently started new destinations sele"ted "ountries in the Caribbean and 4atin A#eri"a (. +he only airline o))er Custo#er Bill o) Fi&hts 9. >n 200(* JetBlue "o#pleted 9(.?I o) their s"heduled )li&hts on ti#e <0. 4aun"hed Jetblue."o# in ,panish <<. Partnership with A#eri"an 3-press "redit "ard <2. Apened the state o) the art hub in J0J* New 1or2 O%%ort#nities
<. 0uel pri"es ha%e been 2.

2. +ra%els to li#ited destinations @. ,to"2 pri"es ha%e dropped o%er the years ?. <@.89I drop in "urrent assets )ro# 2008 to 200( 9. >n"rease in lon& ter# liabilities 7. 5ses third party )uel #ana&e#ent ser%i"e )or hed&in& 8. May not be able to raise "apital due to low #ar2et "ap

@.

?.

9.

7.

steady Ather airlines ha%e raised their )ees )or )li&ht "han&e* ba&&a&e "he"2-in and other additional ser%i"es Additional airport se"urity relie)s airlines )or #aintainin& and installin& "ostly se"urity e/uip#ent Bi-0i and other wireless de%i"es are under "onsideration by 0AA. >n"rease in passen&er's de#and )or sa)ety* better "usto#er ser%i"e* "o#)ort and entertain#ent when tra%elin& >n"rease in international tra%el #ar2et

SAO Strate.ies <. Continue ad%ertisin&* pro#otin& 2ey points i#portant to "usto#ers ,<* ,2* ,9* ,7* ,8* ,9* A2* A9$ 2. 3stablish partnership with other "o#panies ,<<$

-AO Strate.ies <. >n"rease destinations A<* B<* A@* A7$

Copyri&ht = 20<< Pearson 3du"ation* >n". publishin& as Prenti"e .all.

8. ,#aller airlines #ay &o

out o) business

T&reats
<. Bea2 e"ono#y "ausin&

2.

@.

?. 9.

7. 8.

drop in business and leisure >n"rease in operatin& e-penses due to additional "ost in labor "ontra"ts and other &eneral and ad#inistrati%e e-penses >n"rease in )uel "osts in the last )ew years whi"h "ould raise a&ain ,e"urity threats su"h as terroris# >n"rease in se"urity "har&es by +,A "ausin& in"rease in ti"2et pri"e Mer&er a#on& airlines >n"rease in )ederal ta-es

SAT Strate.ies <. Pro#ote >nternet boo2in& and bene)its +2* ,<0$ 2. 5tiliLe the new J0J .ub to )orei&n and business tra%elers ,<2* +<$

-AT Strate.ies <. Cut on "osts by ne&otiatin& better )uel hed&in& and labor "ontra"ts B7* B<* +2* +@$

Copyri&ht = 20<< Pearson 3du"ation* >n". publishin& as Prenti"e .all.

G. SPACE Matri!

0,
7

Conservative
9

Aggressive

<

CA

-7

-9

-?

-@

-2

-< -<

<

>,

-2

-@

-?

-9

Defensive

Competitive
-7

3,

Financia" Stabi"it8 5FS6 DebtC3/uity Fatio Current Fatio Dui"2 Fatio >nterest Co%era&e 4e%era&e Fatio Financia" Stren.t& 5FS6 A(era.e Com%etiti(e Stabi"it8 5CS6 Duality o) ,er%i"e Feputation )or on ti#e arri%al Custo#er 4oyalty Di))erentiation due to o))erin&s 3-Co##er"e +e"hnolo&y

@ 9 @ < @ :./

En(ironmenta" Stabi"it8 5ES6 5ne#ploy#ent +e"hnolo&i"al Chan&es Pri"e 3lasti"ity o) De#and Co#petiti%e Pressure Barriers to 3ntry En(ironmenta" Stabi"it8 5ES6 A(era.e In$#str8 Stabi"it8 5IS6 Erowth Potential 0inan"ial ,tability 3ase o) Mar2et 3ntry Fesour"e 5tiliLation Pro)it Potential

-9 -2 -@ -7 -2 A:.0

-9 -9 -2 -? -2

? ? 9 ? @

Copyri&ht = 20<< Pearson 3du"ation* >n". publishin& as Prenti"e .all.

Com%etiti(e Stabi"it8 5CS6 A(era.e

A:.0

In$#str8 Stren.t& 5IS6 A(era.e

2./

1-a-is: 0, M 3, N @.0 M -@.7$ N -0.07 H-a-is: C, M >, N -@.7$ M ?.0$ N 0.?

B.

Gran$ Strate.8 Matri!

Ra%i$ Mar;et Gro,t& Quadrant II Quadrant I

-ea; Com%etiti(e Position

Stron. Com%etiti(e Position

Quadrant III

S"o, Mar;et Gro,t&

Quadrant IV

<. Felated di%ersi)i"ation 2. 5nrelated di%ersi)i"ation @. Joint %enture

I.

T&e Interna"AE!terna" 5IE6 Matri!

T&e IFE Tota" -ei.&te$ Score ,tron& @.0 to ?.0 A%era&e 2.0 to 2.99 Bea2 <.0 to <.99

Copyri&ht = 20<< Pearson 3du"ation* >n". publishin& as Prenti"e .all.

>

>>

>>>

.i&h @.0 to @.99

>G

>G

G>

The EFE Total Weighted Score

*et+"#e Mediu# 2.0 to 2.99

G>>

G>>>

>H

4ow <.0 to <.99

*.

CSPM
Strate.ic A"ternati(es Increase Contin#e to a$(ertisin. an$ e!%an$ into ne, %romotion b8 .eo.ra%&ic $i))erentiation mar;ets strate.8 AS TAS AS TAS 0.0? 0.08 0.02 0.0@ 0.02 0.07 0.0( 2 ? ----2 ? 2 0.0( 0.2( ----0.0? 0.2? 0.<7 2 @ ----< @ @ 0.0( 0.2< ----0.20 0.<( 0.2?

7e8 Factors Stren.t&s

-ei.&t

<. ,tron& "usto#er loyalty 2. >n"rease in >nternet ti"2etin& "ausin& other operational "osts to be lower @. Chan&e in C3A ?. Fan2ed nu#ber 8 by tra))i" in 5.,. #ar2et 9. New roo#y leather seat air"ra)ts 7. +he only airline o))erin& )ree Dire"+G and HM satellite radio on e%ery seat 8. Fe"ently started new destinations sele"ted "ountries in the Caribbean and

Copyri&ht = 20<< Pearson 3du"ation* >n". publishin& as Prenti"e .all.

4atin A#eri"a (. +he only airline o))er Custo#er Bill o) Fi&hts 9. >n 200(* JetBlue "o#pleted 9(.?I o) their s"heduled )li&hts on ti#e <0. 4aun"hed Jetblue."o# in ,panish <<. Partnership with A#eri"an 3-press "redit "ard <2. Apened the state o) the art hub in J0J* New 1or2
-ea;nesses

0.0@ 0.0( 0.0? 0.07 0.09

----? 2 2

----0.<7 0.<2 0.<0

----@ @ <

----0.<2 0.<( .09

<. Pro)itability is de"linin& due to hi&her )uel "ost 2. +ra%els to li#ited destinations @. ,to"2 pri"es ha%e dropped o%er the years ?. <@.89I drop in "urrent assets )ro# 2008 to 200( 9. >n"rease in lon& ter# liabilities 7. 5ses third party )uel #ana&e#ent ser%i"e )or hed&in& 8. May not be able to raise "apital due to low #ar2et "ap
SU+TOTA9

0.08 0.09 0.08 0.0( 0.08 0.0@ 0.09 1.//

@ < --2 ----@

0.2< 0.09 --0.<7 ----0.<9 1.3>

2 ? --< ----2

0.<? 0.20 --0.0( ----0.<0 1.31

7e8 E!terna" Factors -ei.&t O%%ort#nities

Intro$#ce ne, %ro$#cts )or non tra$itiona" c#stomers AS < ? TAS 0.07 0.2?

Contin#e to e!%an$ into ne, .eo.ra%&ic mar;ets AS ? < TAS 0.2? 0.07

<. 0uel pri"es ha%e been steady 2. Ather airlines ha%e raised their )ees )or )li&ht "han&e* ba&&a&e "he"2-in and other additional ser%i"es @. Additional airport se"urity relie)s airlines )or #aintainin& and installin& "ostly se"urity e/uip#ent ?. Bi-0i and other wireless de%i"es are under "onsideration by 0AA. 9. >n"rease in passen&er's de#and )or sa)ety* better "usto#er ser%i"e* "o#)ort and entertain#ent when tra%elin& 7. >n"rease in international tra%el #ar2et 8. ,#aller airlines #ay &o out o) business
T&reats

0.07 0.07

0.0@

----?

----0.?0

----@

----0.@0

0.09 0.<

0.< 0.07

< --2 3

0.<0 --0.20 0.2?

? 2 < <

0.?0 0.20

<. Bea2 e"ono#y "ausin& drop in business and leisure 2. >n"rease in operatin& e-penses due to

0.< 0.0(

0.<0 0.0(

Copyri&ht = 20<< Pearson 3du"ation* >n". publishin& as Prenti"e .all.

additional "ost in labor "ontra"ts and other &eneral and ad#inistrati%e e-penses @. >n"rease in )uel "osts in the last )ew years whi"h "ould raise a&ain ?. ,e"urity threats su"h as terroris# 9. >n"rease in se"urity "har&es by +,A "ausin& in"rease in ti"2et pri"e 7. Mer&er a#on& airlines 8. >n"rease in )ederal ta-es
SU+TOTA9 SUM TOTA9 ATTRACTIVENESS SCORE

0.09 0.09 0.07 0.09 0.0@ 1.//

? ---------

0.@7 --------1.0/ :.:>

< ---------

0.09 --------1.23 :.2>

7.

Recommen$ations
<. >n"rease ad%ertisin& bud&et* usin& a #ore "reati%e #ethod rea"hin& the tra%elers. >n 200(* the "o#pany spent 27I o) its sales or appro-i#ately K@0 #illion dollars in sales and #ar2etin&. Additional 9I would in"rease the "o#pany's sales i) a #ore dire"t approa"h is ta2en su"h as dire"t #ail or ads to spe"i)i" #ar2et se&#ent. 2. >n"rease >nternet #ar2etin& by "apturin& di))erent &enerations by ad%ertisin& in 0a"eboo2* +witter and other networ2in& "hannels @. 0or# partnership and !oint %enture with "o#panies )or business and &roup tra%elin& su"h as lar&e e%ents and "on)eren"es. Currently* their :Eetaway; )eatures do#esti" &etaways.

L.

EPS/EBIT Analysis
K A#ount Needed: K(0 #illion ,to"2 Pri"e: K9.92 +a- Fate: ?0I esti#ated sin"e 200(* the e))e"ti%e ta- rate was Lero$ >nterest Fate: 9I O ,hares Autstandin&: 28<*87@*<@9
Common Stoc; Financin. Recession Normal Boom K<09*000*000 K<90*000*000 K200*000*000 0 0 0 <09*000*000 <90*000*000 200*000*000 ?@*700*000 70*000*000 (0*000*000 79*?00*000 90*000*000 <20*000*000 28?*297*92@ 28?*297*92@ 28?*297*92@ /.22 /.:: /.22 3/ Percent Stoc; A :/ Recession K<09*000*000 890*000 <0(*290*000 ?@*@00*000 7?*990*000 28<*87@*<@9 /.22 3/ Percent ebt A :/ ebt Financin. Normal K<90*000*000 890*000 <?9*290*000 99*800*000 (9*990*000 28<*87@*<@9 /.:: Boom K200*000*000 890*000 <99*290*000 89*800*000 <<9*990*000 28<*87@*<@9 /.22

3B>+ >nterest 3B+ +a-es 3A+ O ,hares 3P,

Copyri&ht = 20<< Pearson 3du"ation* >n". publishin& as Prenti"e .all.

3B>+ >nterest 3B+ +a-es 3A+ O ,hares 3P,

Percent ebt Recession K<09*000*000 700*000 <0(*?00*000 ?@*@70*000 79*0?0*000 28@*9@7*8(( /.22

Normal K<90*000*000 700*000 <?9*?00*000 99*870*000 (9*7?0*000 28@*9@7*8(( /.::

Boom K200*000*000 700*000 <99*?00*000 89*870*000 <<9*7?0*000 28@*9@7*8(( /.22

Percent Stoc; Recession K<09*000*000 <90*000 <0(*(90*000 ?@*9?0*000 79*@<0*000 282*92@*28? /.22

Normal K<90*000*000 <90*000 <?9*(90*000 99*9?0*000 (9*9<0*000 282*92@*28? /.::

Boom K200*000*000 <90*000 <99*(90*000 89*9?0*000 <<9*9<0*000 282*92@*28? /.22

M.

E%i"o.#e

An A"tober 2009* ,outhwest and JetBlue airlines announ"ed passen&er sur&e )or the #onth o) ,epte#ber* a si&n o) reboundin& )or business and pleasure tra%el. Bea2 e"ono#y and hi&h une#ploy#ent has been a #a!or "on"ern )or the airlines as #any businesses ha%e "ut ba"2 on dis"retionary e-penditures. JetBlue has announ"ed its )irst annual P,win& )or EoodP Eol) Classi" at Bethpa&e ,tate Par2 -- ho#e o) the 2009 5.,. Apen -- bene)itin& two "haritable partners: JaBAAMQ* a not-)or-pro)it or&aniLation that en%isions a &reat pla"e to play within wal2in& distan"e o) e%ery "hild in A#eri"a6 and Do,o#ethin&* an or&aniLation that e#powers youn& people to ta2e a"tion in their "o##unity around any "ause. 0or#er Ma!or 4ea&ue Baseball players Mi2e +orreL and +i# Faines will be out on the lin2s and Dwi&ht Eooden will also be in attendan"e at the e%ent. JetBlue also has been pro#otin& itsel) by so#e "reati%e #ar2etin& "a#pai&n :All-1ou-Can-Jet.; All-1ou-Can-Jet pro#otion whi"h allows tra%elers to )ly anywhere JetBlue )lies as o)ten as they would li2e within a #onth )or K999. JetBlue ended the pro&ra# sooner than e-pe"ted as response was stron&er than anti"ipated. +he pro&ra# had a nu#ber o) /uir2s that #a2e it "hallen&in& to tra"2 the dri%ers o) its su""ess. 0or e-a#ple* passen&ers "ould enroll and boo2 only %ia phone. +he phone-based syste# #ay ha%e also )a"ilitated enroll#ent in JetBlue's )re/uent )lyer pro&ra#Rre/uired i) passen&ers were not a #e#ber already. Despite their pro#otional and e-pansions* airlines "ontinue to ha%e losses. Currently* the outloo2 is #i-ed S a )ew bi& airlines raised their loads whereas a )ew are tal2in& about )ilin& )or ban2rupt"y. >n%estors are wonderin& whether the e"ono#y would rebound* i#pro%in& the #ar2et )or a pro)itable %enture and tra%elers are spe"ulatin& )or better e"ono#i" results so they "an a))ord to )ly #ore.

Copyri&ht = 20<< Pearson 3du"ation* >n". publishin& as Prenti"e .all.