FINANCIAL STRATEGY 2 Financial Strategy Analysis of JetBlue Airways Corporation

Running head: FINANCIAL STRATEGY
Financial Strategy
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1FINANCIAL STRATEGY
Executive Summary:
In the current report, the financial position of JetBlue Airways Corporation is analysed
for providing recommendations to the organisation in relation to its investment plans. It is a low-
cost and low-fare passenger airline group, which serves the US market. By the year 2003, the
organisation has been intending to support its growth by acquiring various new aircrafts over the
next 13 years. This necessitates the need for the organisation for greater capital expenditure in
order to support those acquisitions along with various associated investments. It has been found
that JetBlue would have a financial position, which minimises its overall WACC. As a result, it
maximises the overall value of the stock of the organisation. Hence, from the financial
perspective, it could be stated that the feasible alternative for planned investments is the issuance
of equity for 2003.

2FINANCIAL STRATEGY
Table of Contents
1. Introduction:................................................................................................................................3
2. Problem definition:......................................................................................................................3
3. Industry analysis:.........................................................................................................................4
4. Financial alternatives:..................................................................................................................7
5. Financial statement analysis of the alternatives:.........................................................................8
6. Non-financial analysis:..............................................................................................................11
7. Conclusion:................................................................................................................................14
References and Bibliographies:.....................................................................................................16

3FINANCIAL STRATEGY
1. Introduction:
In the current report, the financial position of JetBlue Airways Corporation is analysed
for providing recommendations to the organisation in relation to its investment plans. It is a low-
cost and low-fare passenger airline group, which serves the US market. By the year 2003, the
organisation has been intending to support its growth by acquiring various new aircrafts over the
next 13 years. This necessitates the need for the organisation for greater capital expenditure in
order to support those acquisitions along with various associated investments (Alamdari &
Fagan, 2005).
A background research is carried out for evaluating the ways the other airlines are
funding their aircraft acquisitions and other investments. The various alternatives of funding
available to the organisation are studied in association with the financial position of the same.
Finally, a non-financial evaluation of the debt and equity alternatives is conducted in relation to
all those business areas other than finance.
2. Problem definition:
According to the case study, JetBlue Airways Corporation has finished an initial public
offering (IPO) in 2002 around two years after its establishment. JetBlue has a successful business
model and effective financial outcomes during that timeframe and it has performed well in
contrast to the other US airline firms between 2000 and 2003 (Bhalla, 2004). By July 2003,
JetBlue has been experiencing various opportunities to grow by including new markets and new
flights to the current destinations. For achieving such growth, the organisation has been planning