Comprehensive Economic and Financial Analysis: JetBlue Airways Report

This report provides a comprehensive analysis of JetBlue Airways, examining its economic and financial performance. It begins with an overview of JetBlue, including its founding, network, fleet, and key competitors. The report then explores the airline's future situation, revenue trends, and business model, including its low-cost differentiation strategy and key partners. A PESTLE analysis is conducted to assess the political, economic, social, technological, legal, and environmental factors impacting JetBlue. Ratio analysis, including liquidity, profitability, and capital structure ratios, is used to evaluate the airline's financial health. The analysis covers the years 2019, highlighting key financial metrics. The report concludes by summarizing JetBlue's strengths, opportunities, and threats, and providing recommendations. References from various sources support the analysis.

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Contents
JetBlue airlines...........................................................................................................................3
Future situation...........................................................................................................................3
Business model...........................................................................................................................5
PESTLE analysis of JetBlue......................................................................................................6
Ratio analysis.............................................................................................................................7
Conclusion..................................................................................................................................9
References................................................................................................................................10

JetBlue airlines
JetBlue was founded in 1998, which is headquartered in United States. The company operates
more than 100 domestic and international network destinations in US, South America, and
Central America. The number of passengers was nearly 40 million in 2017 and 42.2 million
in 2018. Company engaged 264 in-service fleets and other ordered fleets include 148 (JetBlue
airways, 2019). Average capacity. Major airports connecting traffic are Boston, long beach,
New York, Sam Juan, or Orlando. The company has an employee base of 22000. ASK
represents available seat kilometre, which is a measure of carrying when generating revenues
and JetBlue airways has the capacity of 63.84 billion seat miles. RPK reflects the number of
kilometre travelled by the passenger. JetBlue Airways came around 53.62 billion in 2019 for
revenue passenger miles (JetBlue airways, 2019).
Competitors
Rivalries among the existing players is quite intense and it can down the prices and finally
decrease the overall profitability of industry. It operates in competitive regional airline
industry. The JetBlue competitors are Southwest, delta, united, SkyWest, Alaska, spirit,
Frontier, copa Airlines, and Hawiian (JetBlue, 2018).
Future situation
Revenue trends

(Source: Statista, 2020)
Fleet plans and fleet revenue trends-
The organisation is among largest airlines in US with maximum affordable fares, and
ancillary services. JetBlue has not been only available economy class airline, which includes
attraction of customers from business, and families from the perspective of customer
segments.

(Source: Weinberg, 2017).
Business model
JetBlue has been moving towards the conventional business structure while multiplying fleet
types, GDS participation, emphasizing on high yielding passengers, expanding by
collaborating with international partners, which is in the direct connection to achieve low cost
differentiation (Forbes, 2015).
The key partners of the company includes reward partners, airline partners, and alliance
partner such as British airways, Hawaiian airlines, MasterCard, emirates and the NRG among
the reward partners. Until 2015, JetBlue operates fleet of 25 Airbuses, 130 Airbus A320
aircraft, E190 aircraft and 60 Embraer (Massa, Tucci, and Afuah, 2017).
Cost associated with the acquisition and maintenance of the aircraft, supply of consumables,
operation of sales, and the marketing programs, which in return maintain the physical

infrastructure and support facilities by retaining the personnel (Linder, and Williander, 2017).
Revenue streams of the company includes the provision of passenger airlines in relation to
the offices in form of rental and utility fees (Bocken et al., 2016). JetBlue generates revenues
from consumers and professionals. Sale of airfares and other related fees. The vast majority
of JetBlue revenue is generated by organisation because of increasing revenue from
passengers (Investor relation, 2019).
(Source: JetBlue, 2018)
PESTLE analysis of JetBlue
Political factors- JetBlue airways face government regulations and rules and aviation taxes
and fees affect its operations. A positive and health relationship between middle easy nations
and America is quite important as JetBlue is dependent on these nations for oil (Linder, and
Williander, 2017).
Economic factors- This airways is affected by the apprehension of the economic slumps in
America. There will be a change in demand when the personal disposable income of
American people. The price of the fuel has been increasing. The company has the opportunity

to expand in new markets in Europe and Asian markets where airline market has been
growing (Weinberg, 2017).
Social factors-
The flexibility and cheap airfare with the increase in the income level has promoted towards
increasing demand for the travelling in airlines (Rastogi, and Trivedi, 2016). Most people
wants to travel in aeroplane, which was earlier impossible for the middle class families but
the heavy competition in airline market can lead to high price cut regarding the airline tickets.
Increasing tourism contributed to increasing sales of JetBlue (Achinas, Horjus, Achinas, and
Euverink, 2019).
Technological factors-
Undoubtedly, the nation’s technological factor such as efficiency, use of online platforms to
book the tickets, increase in bookings, applications and check- in kiosks. JetBlue
continuously purchase aircraft, which are most efficient while using fuels (Achinas, Horjus,
Achinas, and Euverink, 2019).
Legal factors-
JetBlue airways will have to be quite careful to rules and regulations of nations. Passenger’s
safety is quite important. After the attack, it is seen that security laws are being imposed on
the airlines to enhance the security of passengers and ensuring that the terrorist attack does
not happen in this case.
Environmental factors-
This factor ensures that the climate leadership and the sustainability influences the
environment. JetBlue is environment friendly, where working to add more fuel efficient
aeroplanes in the fleet.

Ratio analysis
The ratio analysis is a tool to analyse the financial statements, which helps the investors to
foresee whether these investors should invest or not. Liquidity ratio indicates whether the
company will be able to pay off its short term obligations. The prominent ratios to measure
appropriate liquidity includes current ratio and quick ratio (Investor relation, 2019).
i uidit ratioL q y For ulam 2019
Current ratio Current ssets Current iabilitiesA ÷ L 0.67
ui ratioQ ck ui ssets Current iabilitiesQ ck A ÷ L 0.64
From the above table, it is seen that current ratio will reflect the efficiency of the organisation
by analysing whether the company has been capable in paying off the current obligation by
current assets. The ideal ratio for current ratio will be 2:1, which indicates that company must
have two times of current assets to pay off one current liabilities (Massa, Tucci, and Afuah,
2017). Here, JetBlue maintains current ratio of 0.67:1, which indicates that the company
maintains only .67 times of current assets (Limbong et al., 2018). This ratio is reduced
because of decreasing cash, and less working capital.it is important to enhance the current
ratio, which can be done by increasing cash, account receivable and sales (Bocken, Pauw,
Bakker, and Grinten, 2016).
Profitability Ratios 2019
Operating Profit Margin Operating profit/Net sales 10%
Net Profit Margin Net Profit/Net Sales 7%
Return on Equity Net Income ÷ Average Stockholders' Equity 12%
Return on Total assets Net Income ÷ Average Total Assets 5%
Profitability ratio analyses the profitability while overviewing the generation of operating
profits in regards to total sales. The standard ratio for profitability ratio is 15-20 percent.

Operating margin generates a profit of 10 percent, which reflects that the company generates
a reasonable income, which can be distributed among the shareholders (Bocken et al., 2016).
Return on equity refers to the total income, which can be distributed among the shareholders.
12 percent of return on total equity reflects that company has been performing well in terms
of returning equity (Limbong et al., 2018).
Capital structure ratio 2019
Debt- equity Debt-Equity Ratio = Total Liabilities ÷ Total Equity 0.42
Interest coverage ratio EBIT ÷ Interest Expense 12.52
Capital structure ratio are calculated with an aim to evaluate whether the company will be
able to pay of its long term debts. A standard ratio for capital structure ratio is 2:1 where debt
is tow times of the equity employed. The company employs only .42 times out of total one
equity, which does not indicate sufficient for the capital structure (Linder, and Williander,
2017). This indicates that the company have more tax burden as it does not bear long-term
debts, which in return will be deductible as an expense. Company is able to pay off its
interest expense 12.52 times, which is quite good as the company might only maintain short-
term loans (Evans et al., 2017).
Conclusion
From the above discussion, it is seen that the company has created its strengths such as low
cost, catering customer services, airline collaborating. The opportunities available to the
company regarding expansion through economic and financial situations can be by
positioning among the Millennial. The company faces threats such as coat of fuel,
uncertainties, and competition. Greater is the return on equity, higher is the distributable
income, which will increase the interest of the shareholders towards the company. A higher

profit ratio indicates that company has been doing well. Maintaining an ICR of two times and
more can be accepted for the organisation. Moreover, less than one ratio can be considered as
insufficient.

References
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Bocken, N.M., De Pauw, I., Bakker, C. and van der Grinten, B., 2016. Product design and
business model strategies for a circular economy. Journal of Industrial and Production
Engineering, 33(5), pp.308-320.
Evans, S., Vladimirova, D., Holgado, M., Van Fossen, K., Yang, M., Silva, E.A. and Barlow,
C.Y., 2017. Business model innovation for sustainability: Towards a unified perspective for
creation of sustainable business models. Business Strategy and the Environment, 26(5),
pp.597-608.
Forbes, (2015). A Closer Look At JetBlue's Strategy. Available on:
https://www.forbes.com/sites/greatspeculations/2015/10/15/a-closer-look-at-jetblues-
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Investor relation, (2019). JetBlue Orders 13 Airbus A321XLR Aircraft to Support Its Focus
City Strategy with Transatlantic Flying. Available on: http://mediaroom.jetblue.com/investor-
relations/press-releases/2019/06-20-2019-162857598 [Accessed on: 21/03/2020]
JetBlue airways, (2019). JetBlue Ushers in the Future of its Fleet as Airline Inaugurates First
Airbus A321neo Aircraft and Honors Founder David Neeleman. Available on:
http://mediaroom.jetblue.com/investor-relations/press-releases/2019/09-24-2019-152958665
[Accessed on: 21/03/2020]
JetBlue, (2018). JetBlue Advances Focus City Strategy with Network Reallocation, Including
New Service in Guayaquil, Ecuador. Available on: http://mediaroom.jetblue.com/investor-
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