IntroductionJetBlue is a low-cost domestic airline launched in 1999 in the United States which follows a rather interesting combination of low-cost and differentiation as its strategy. The core of JetBlues strategy was low-cost achieved through a smaller and more productive workforce; automated processes; better use of technology; use of brand new single model planes that reduced maintenance costs and training costs at the same time. It had been the only other airline apart from Southwest airlines, to have been profitable during the aftermath of the September 11, 2001 attacks on World Trade Centre, and at a time when the entire airline industry was experiencing losses. After a few years of strong growth and continuous success since its origination, JetBlue transformed its ownership to become a public listed company in 2002. The process of this transformation is a complex and expensive business however, one can expect high returns and rapid growth that follows.
This report describes the process of going public by first explaining the importance and application of firm valuation. The second part of the report introduces the advantages and disadvantages of the transformation. The third part of this report summarises main methods of firm valuation which follows by the illustration of a valuation for JetBlue. In addition, to the process of going public and firm valuation, SWOT Analysis as well as Porters Analysis for JetBlue is also considered as these are necessary in determining current position and future direction of the firm.
One of the most vital determinations that every private and public firm must consider is its value. The principle behind firm valuation is to express its price in monetary terms taken into account the firms assets, debt and equity. The value of the firm is not found in the financial statements because the value arises from expectations.