Jetblue Airways Ipo Valuation

His idea was "to launch a new airline that would bring humanity back to air travel (Schill, M. J. , et al, 2003, pp. 344).

" The employees of JetBlue "strive to make every part of your experience as simple and as pleasant as possible OetBlue Airways, 2009, Para. 1). " David Neeleman began his airline, based out of New York, with a small fleet of new A320 Airbus aircraft. By having new aircrafts, Mr. Neeleman cut down on aircraft mechanical problems, as well as training on the aircraft.

Also, low cost was accomplished by having a smaller, more productive workforce, as well as better use of current technology.This saved money for the fledgling company. JetBlue focused on a positive flying experience with point to point full service from the dedicated employees of the company (Schill, M. J. , et al, 2003).

In April of 2002, JetBlue Airways began trading publicly in the NASDAQ exchange under the ticker symbol of JBLU. The initial public offering, or IPO, for JetBlue was 5. 5 million shares of common stock offered for public trading (Schill, M. J.

, et al, 2003). By late April 2002, JetBlue took delivery on two more aircraft OetBlue Airways, 2009).This case study describes the process that a company must go through in order to ffer common stock for public trade. It also brings up the advantages and disadvantages of being a publicly traded company. The direction the company follows after becoming a publicly traded company may differ from how the company began.

The exhibits support the information given in the case study. IPO stands for initial public offering. It is the process that a company must go through in order initially sell publicly traded equity. It is primarily for raising additional capital or funds for a company that will be used to sustain its growing needs (production, distribution, and others). The term merely applies to initial issuance of common shares to interested public investors (Initial-public-offering- Process, Para.

5). " The process, which takes one hundred days, or more, begins with choosing a bank, intent. A registration statement needs to be filed with the Securities and Exchange Commission, also known as the SEC. There are two parts to the registration statement, the prospectus, and information that is made accessible for public inspection by the SEC.

These disclosure requirements make sure that the public has correct information pertaining to the sale of the offered securities. The underwriter needs to verify this information by investigating the company (Ellis, K. , et al, 1999). The registration statement, once filed with the SEC, becomes the preliminary prospectus. The primary prospectus is used as a marketing tool.

When the registration statement becomes effective, the preliminary prospectus is converted to the prospectus, which is the official offering document.Then, the offering is marketed, which is called a "road show. " The registration and marketing can take several months (Ellis, K. , et al, 1999). The day before the effective date, but after the market closes, the company and he underwriter decide the exact number of shares to be sold, as well as the price those share will be offered to the public. After the final terms are hammered out, the underwriting agreement is executed; the final draft of the prospectus is printed; and a price amendment is filed on the morning of the chosen effective date (Ellis, K.

et al, 1999). After SEC approval, the stock distribution begins. On the chosen effective date, the stock offerings are traded for the first time. However, the closing of the transaction occurs several days later, usually eight days. This is when the nderwriter deposits the net proceeds from the IPO into the company account.

The underwriter now needs to provide after market stabilization, as well as analyst recommendations, and making a market in the stock, which enhances the demand for shares (Ellis, K. , et al, 1999). The IPO process is long and arduous.A company needs to be totally committed before beginning the process. However, becoming a publicly traded entity is preferable to, for example, selling debt.

This is due to the facts that, with an IPO, only a certain amount of agreed upon shares are to be offered to the public. Control of he organization should remain as it was prior to being publicly traded. JetBlue made a positive choice to become a publicly traded entity. By doing this, JetBlue has increased their capital in order to sustain growth of the company. Growth within the company has increased revenues for the company.