Jetblue Airways Case Analysis

1. Introduction

JetBlue Airways Corporation (JBLU), incorporated in Delaware in 1998, is the fifth largest passenger carrier in the U.S. based on revenue passenger miles. With an average of 800 daily flights, it serves more than 30 million passengers and provides flights to 82 destinations in the U.S., Caribbean, and Latin America.

Purpose of this paper is to analyze the current issues of JetBlue and provide strategic solutions.

2. Business Environmental analysis 2.1 The specific business industry

World air travel industry continues to grow steeply, but without a steady profitability. Monetary value of revenues had doubled in past decade from USD 369 billion in 2004 to an estimated USD 746 billion in 2014 according to International

Opening up of industry and availability of financial resources, reduces this barrier. Strong branding forces new comers to invest heavily on attracting customers from the present airlines. However, branding has not been very effective in keeping the customers in airline industry. Thus threat of new entrants in airline industry is high particularly in low-cost segments. Only very high efficient operations can keep the new entrants out of industry. Bargaining power of suppliers: This is high, since there are only few suppliers in the industry, and no direct substitute for their products. Product is very important element for buyers industry. Boeing and Air Bus are the only major suppliers to the industry. Pilots are trained for a particular airline, switching cost can be significant if airline plans to change their plans. Thus supplier is not benefited by significant bargaining power. There is no major threat of suppliers interfering in buyers’

Most of JetBlue’s primary competitors including Southwest Airlines and Delta Airlines are larger and have financially very strong and established brand name. Many of the competitors enhanced their services and dropped prices to give tough competition. In addition, there has been a lot of merger and acquisition activity within the industry which caused fares to reduce further putting pressure on revenues and earnings of JetBlue.

Geographic Risk: JetBlue when expanding into Latin America is also subjected to high risk. These countries are emerging markets, and face risks due to political and economic instability, underdeveloped legal systems, strike from third party service providers etc.

3.1 Firm financial status analysis

In 2014, company went through a tough time of unstable financial condition, continuing fuel price fluctuations, and the high competition from rivals. Even with these disturbances, company could still count 2014 as one of the most lucrative years in its history. Company saw its growth in operating revenue of 7% year upon year, and reported highest ever net income of $401 Million, that includes sales of their subsidiary LiveTV. There was an increase of $233 million in net income as compared to