JetBlue: Internal & External Analysis - Essay Example

? (Assignment) JetBlue: Internal & External Analysis I. General environment JetBlue Airways Corporation, the American low-cost airline is headquartered at Forest Hills in New York City. It was founded by David Neeleman in February 1999 under the name ‘NewAir”. The company’s satellite office is located at Darien, Connecticut and its corporate office located at Cottonwood Heights, Utah. JetBlue is a non-union airline which has won the ‘Reader’s Choice Awards’ offered by Conde Nast Traverler magazine in October 2007 (Maps of World Airlines). True Blue Flight Gratitude is the parent company of the JetBlue Airlines. John F. Kennedy International Airport is the main base of the company. In addition to this, JetBlue’s major hubs involve Orlando International Airport and Washington Dulles International Airport. While analyzing the corporate performance of the firm, it is obvious that JetBlue has achieved a prominent position in the US airline travel. JetBlue tends to follow the low-cost travel approach of Southwest Airlines. At the same time, the company distinguishes itself by maintaining its distinct features including in-flight entertainment, satellite radio, and TV on every seat. In the view of the founder Neeleman, JetBlue is trying “to bring humanity back to air travel” (JetBlue Press Release). The JetBlue Airways Corporation was awarded 75 initial take off or landing slots at John F. Kennedy International Airport in 1999 and subsequently in 2000, the company received formal US authorization. The JetBlue began its operations on 11th February 2000 by extending its services to Buffalo and Ft. Lauderdale. This Airlines Company has an alliance with Aer Lingus Airline. Presently, JetBlue Airways offers flight facilities to more than 50 destinations. The fleet size of JetBlue Airways is 138 aircrafts that include 33 Embraer 190 and 105 Airbus A320-200. JetBlue is well known in airline travel for offering great level of comfort and safety to its passengers. The company showed its stability and industrial efficiency as it raised a considerable amount of profit during the sharp decline in airline travel despite the 2011 terrorist attacks. The company would align with partners who have similar brand attributes because it is looking forward to higher returns on investment (JetBlue Getaways). Similarly, JetBlue has made alliance with the International Student identity Card (ISIC) with intent to extend its services to student travelers. This provision has greatly assisted the company to attract large number of student travelers. As part of its community relations plan, the JetBlue supports nearly 700 nonprofit organizations throughout its American destinations. In addition to the community relation programs, the company motivates its crewmembers and communities to participate in engagement programs, annual volunteer projects, and other several signature initiatives (JetBlue Getaways). The JetBlue has designed a social responsibility program called ‘Jetting to Green’ that deals with environmental issues for promoting a greener planet. The firm also produces ranges of employment opportunities that would certainly enhance national economic growth. JetBlue Cargo is an additional service offered by this Airlines Company. The company has arranged wide ranges of facilities for booking flight tickets and other amenities such as hotels, cars, and cruises. Moreover, the company maintains a well designed website that gives all information regarding its projects and services. Performance of JetBlue While comparing the overall performance of JetBlue with other American Airlines companies, it is evident that the firm has grown greater within a short period of time. In 2002, the JetBlue had two billion dollars in market capitalization. The JetBlue’s financial position was very strong throughout the 2002-2004 years whereas other American Airlines companies had really struggled during this period. The JetBlue has given greater priority to customer services; the company’s commercials and print ads say the customers that “encourage you to use the call button” (JetBlue Airways). The record making profits of the company persuaded the management to explore additional route opportunities. Although, the company faced difficulties during 2005-2007 as results of rising fuel costs and snowstorm, it could successfully come back to profitability by the end of the 2007 fiscal year. The JetBlue’s 2010 annual report indicates that the company’s overall economic conditions significantly improved during 2010 as compared to 2009. However, the on-time performance of the company was 75.7% in 2010 whereas it was 77.5% in 2009 (2010 annual report). During 2010, the company gave great emphasis on the improvement of revenues during the off-peak seasons by attracting new customers. The JetBlue has greatly improved its revenue margin by earning $97 million in 2010 while it was only $61 million in 2009. In addition, the company improved its operating income by an increase of $48 million over 2009 and reached $333 million in 2010. The improved financial performance naturally strengthened earnings per share; the company’s diluted earnings per share were only $0.21 in 2009 and it rose to $0.31 in 2010 by an increase of $0.1. The operating revenues increased dramatically by 15% mainly due to an increase in passenger revenues which in turn can be attributed to a 7% rise in yield, 7% rise in capacity and a 1.7 point rise in load factor over 2009. At the same time, operating expenses also increased by 15% mainly due to higher fuel prices. In addition, the increase in operating expenses is also attributable to customer service system implementation expenses, technology infrastructure costs, and a one-time impairment charge. From the financial statements of JetBlue, it seems that company’s total property and equipment slightly increased in 2010 as compared to 2009. Likewise, a notable increase is seen in the case of investment securities also. It is hopeful to note that the company could reduce its long-term debt and capital lease obligations. While looking through the operating income of the company over last few years, it is clear that JetBlue consistently improves its operational efficiency. The financial statement indicates that the firm’s operating incomes were $113 million, $285 million, and $333 million respectively for 2008, 2009, and 2010. Finally, the net income of the company over the last three years also provides good results. In 2008, the company faced a net loss of $84 million but it came back to profitability in 2009 by earning $61 million net income. Works Cited JetBlue Getaways. JetBlue.com. web 6 June 2011 Read More