The workforce of JetBlue is non-unionized and does not benefit from strict work regulations. Table of Content David Needleman founded Jet Blue based on his own experiences and seeking to improve the expectations of his clients, collaborators and associates, thus making the service excellent. * Environment Factors SWOT Analysis 14 Indeed, the planes have the same age and might all suffer at the same time from an eventual recurrent technical problem on this type of aircraft, which should be catastrophic for the company. In addition, from exhibit 12, the Treasury bill interest rate as of June 30, 2003 is 1.09%, this will be used as the risk-free rate of return. Soligen is a metal casting industry which produces fully functional 3-Dimensional, | The company will be more exposed to both the fuel price volatility and the growing cost of hedging it. The emergence of the low cost carriers such as JetBlue and SkyBus Airlines, compounded the pricing freedom led to a situation whereby the new entrants took up the market share with highly reduced rates. This stock might be considered as equity in accounting, to strengthen the balance sheet of the company, but will at the same time accommodate the board members’ concern about dilution.
The point-to-point services save. In a longer-term perspective, it is recommended to the company to use leases and secured debt for the upcoming aircraft acquisitions when favorable terms are available to the company, and to finance the remaining parts of the investments through cash generated from operations and through issuance of new equity, in order to compensate for the increasing financial and operational risks of the company. In its ‘Airlines return to capital markets’ article, David Knibb (2009) summarizes the ways several companies found financings: Lufthansa, Air-France KLM, British Airways, Air Canada, Australia’s Virgin Blue, Avianca and Indian carrier Kingfisher all issued bonds during 2009.
Therefore, the company depends on its operating cash flow to finance its short-term and working capital obligations. JetBlue is geared towards the provision of low cost and low fare for its services. WestJet have two major problems lead them crash down, which is transfer the files from old reservation system to new system without backing up the data and the second one is did not have enough staff to response customers complained. adam June 30, 2010 Aerospace & Airline No Comments. Mission, Objectives, and Strategies 3
All of this calls for some financial conservatism for the airline industry. Show More. United Continental Holdings also raises cash from issuance of common stock (United Continental Holdings Annual Report 2010, p.56). The second proposal from the investment banks is to issue $150 million in a private placement of convertible debentures. The debentures will be a 30-year convertible debt with a coupon rate of 3.5%. Despite the competition, JetBlue has had ambitious growth plans, focusing particularly on the needs of users who were not satisfied, such as itineraries, high fares and commuters when traveling, among others.
. The fuel price is also an external factor due to its non-predictable volatility. From this study, it appears that the majority of airline companies are financing their aircraft acquisitions, apart from using cash flow generated by operations, through debt, either leases or secured debt. For the purpose of this study, a SWOT analysis of JetBlue as by its position in June 2003 is performed. The revenues of the company and its growth aspirations are subject to the economic conditions. This led to a major constraint in the profitability especially for the established, SWOT Analysis * Technological Changes Issuing private debt securities represent a threat for JetBlue as this might lock back the company to such private investors. The company has been performing well in the recent years. JetBlue does not need any rating agency for the issuance of the bonds, as those are private. It turns out that the company has an optimal financial structure, minimizing its weighted average cost of capital, following those estimated figures. MGT450: Strategic Planning for Organizations Executive Summary
JetBlue might thus lose its advantages from being low-cost, small and highly profitable. A non-financial analysis of the debt and equity options is conducted, in order to assess the relevance of each of those options with regards to all areas of the business other than finance. Jetblue Pestle Analysis.
Copyright © 2003 - 2020 - All Answers Ltd is a company registered in England and Wales. Any variation in the estimated revenues, might lead the company to a position where it could not meet its financial obligations related to debt.
* Intensity, Question 1: Select 2-3 companies profiled in the case and discuss the formulation of their respective strategies for commercializing the TDP Technology
Thus, JetBlue is a perceived as a solid and growing company by the investors. | | Strengths | | | | | Weaknesses | | Second, John Owen needs to think about a long-term financing strategy. The internal stability of JetBlue will probably continue to hold, unless the company faces some financial distress, or if the shareholders are no more supporting the management team. The three companies we would further discuss are the Soligen, Specific Surface Corporation (SSC) and Z Corp.
A substantial portion of the company’s assets, principally aircraft, are pledged under various loans and other obligations. JetBlue is an American low-cost airline and is headquartered in New York City. | | | | | | | | | | | As the company will get bigger, with higher manpower, those might want to be unionized.
JetBlue’s market capitalization can be estimated at around $3.12 billion (74,423,693 * $41.98) as per June 30, 2003.
The company needs thus to think about a way to finance those acquisitions, as well as other needed investments such as spare parts, new engines, additional hangars and a flight training center.
SpiceJet, an Indian airline company operating to Mumbai, Bangalore, Ahmedabad, Pune, Goa and Delhi issued in 2005 foreign currency convertible bonds worth $90 million to fund aircraft acquisitions (IndiaAviation, 2005). The company operates only new airplanes, thus minimizing maintenance costs and offering a good “flying experience” to its customers. Strengths. With a short-term debt of $26,580 thousand and a long-term debt of $731,740 thousand as by June 2003, and equity of $480,594 thousand, the company’s leverage ratio is 157.8%, whereas the industry average is around 129.46% (Infinancials). JetBlue might be exposed to technical and/or non-technical problems that have been not detected by the manufacturer or other users of the jet. The revenues are forecasted to continue to grow up to a level of $1,796.9 million in 2005 (Exhibit 9).
SWOT ANALYSIS of IKEA ------------------------------------------------------------------- 7 - 8 Sloigen: Recommendations 20
Indeed, those need to be ranked by some ranking agencies and will have higher coupon rates (Exhibit 12).
As per June 2003, JetBlue Corporation has a short-term debt of $26,580 thousand, a long-term debt of $731,740 thousand and equity of total $480,594 thousand (Exhibit 5a).
JetBlue does not have a line of credit, or short-term borrowing facility. If JetBlue chooses to finance its future aircraft acquisitions by debt, the acquired aircraft can be used to secure the corresponding debt.
1599 Words 7 Pages. The market is impacted by a general economic slowdown caused partly by the terrorist attacks of September 11, 2001. The company has grown exponentially, Approach The notes will be unsecured obligations and will rank equal in right of payment with all other unsecured debt. Threats….………………………………………………………………...5 The company is operating only one type of airplane, the Airbus A320. The low fares offered by JetBlue would allow it to attract new passengers who might otherwise not fly. Indeed, JetBlue is committed to the purchase of 207 additional aircraft for a total amount of $6.86 billion over 8 years.
This represents a very big investment and thus a consequent threat for the company. Value of JetBlue in every steps to avoid problem Those financing possibilities are still available for the company for additional aircraft purchase.
The company will also have to secure additional airport gates which will represent a threat for the company in case it cannot negotiate advantageous conditions as with underserved airports.
The company is clearly departing from its strategy, which has been the source of its strengths up to 2003. SWOT Diagram…...………………………………………………….......3 Role of Communication in Change Management.
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