Jetblue Ipo Essay

The advantage of a IPO is the ability to acquire the necessary funds easily, which is something to consider if in the future the company would like to expand or had a project that needed indispensable funds than the company had available right away.

In this paper the questions regarding a businesses decision to go public will be addressed. Recent changes such as Sarbanes-Oxley governance ruling have had significant impact on the planning and execution of IPO's however, going public still remains the best route to additional capital for a company. We will also take a look at Google's successful rollout of their public offering. However first we need to look at what it takes for a company to go public. In the text of the Fundamentals of Corporate Finance the initial description of IPO succinctly captures the essence of need and subsequent process of an IPO.

JetBlue Airways Corporation is one of the few American low-cost airline and the 5th largest airline in the United States. JetBlue carries more than 35 customers each year to 96 cities in the U.S., Caribbean and Latin America with an average of 925 flights. JetBlue Airways Corporation is a publicly traded company. The top 5 shareholders are Dave Barger, Joe Clinton Peterson, Robin Hayes, Mark Powers and Frank Sica accordingly. Dave Barger is the largest shareholder with approximately 860, 000 shares as of March 15, 2015 and the former chief executive officer (CEO) of JetBlue. Joe Clinton Peterson is the second largest shareholder with roughly 610,000 shares owned. Peterson, is the CEO and founder of Peterson Partners LP, a private equity firm. Robin Hayes, is the current CEO of JetBlue having replaced Barger in 2015 and he also sits in the company’s board of directors. Hayes, position owned 360,000 shares as of July 6 2016 making him third-largest shareholder. Mark Powers’ is JetBlue’s chief financial officer (CFO), his position nearly 190,000 shares the fourth-largest shareholder. He has been with the company since 2006 following his appointment as JetBlue’s treasurer. Frank Sica, has been the Vice chairman of JetBlue’s board of directors since 1998. He approximately owned 91,000 shares as of February 21, 2016 making him the fifth-largest shareholder. JetBlue Airways headquarters, 2701 Queens Plz N, Long Island City, NY 11101 is the location of the world headquarters.

Supporters of companies going public suggest that gaining additional capital is one of the benefits medium sized companies gain by going public. The rationale for going public is to float the shares of the company through the stock market by starting an initial public offer (IPO) inviting the public to purchase its shares and raise additional capital. Once the company has met all of the requirements for filing Security Stock and Exchange (SEC) they are in compliance with SOX. Under SOX section 404, requires

The market is extremely unpredictable and an unsuccessful IPO can result in a great loss of time as well as money for the company

* Is going public, particularly at the time they did, a good idea for JetBlue?

This report discusses whether and how JetBlue should list its shares on public from several angles. Two principal incentives prove that the IPO process could be inevitable, even without an optimal offering price, and valuation models including multiples comparison and income analysis imply the firm may be underpriced. Given the situation and all assumptions, an increment in either offering size or price is suggested.

There are several methods of valuation that can be brought forward for JetBlue Airlines to consider. The first method to consider is the book value method, which determines the value of a firm by looking solely at the book value of the firm’s assets. This method would virtually use accounting numbers to value the equity of a firm. The book value method is normally only appropriate for firms with commodity-type assets that are valuated at market with no intangible assets. This is not always a beneficial method to use because it ignores future cash flows for the firm and inflation effects. It is also more common for product-based businesses, which would not be viable for JetBlue Airlines because it is a service-based company.

A partnership is when there is a contract amongst two or more people to invest and run a business. Each individual partner has the equivalent responsibility and power to make decisions and manage the business. It is necessary each associate takes part in daily tasks of the business and share responsibilities between each other in order to develop a successful partnership. “The joint ownership concept that describes a business partnership gives it certain distinct advantages and disadvantages”. (Partnership advantages and disadvantages, no

Given the size of the capital raised through public offering, it could be a tedious task to raise same amount of capital in private placements.

It is true that IPO raises huge capital for the issuing company. But in order to launch an Initial Public Offering (IPO), it is also necessary to make certain investments. Setting up an IPO does not always lead to an improvement in the economic performance of the company. A continuing expenditure has to be incurred after the setting up of an IPO by the parent company. A lot of expenses have to be incurred in the form of legal fees, printing costs and accounting fees, which are connected to the registering of an IPO. Such expenses might cost hundreds of US dollars. Apart from such enormous costs, there are other factors as well that should be taken into consideration by the company while introducing an IPO.

There are many reasons why companies go public. To provide a general overview of the key benefits, a few of the most

Thanks to the advancement of the worldwide financial market, especially that of stock exchanges, Chinese leading firms have the chance to propose IPOs (initial public offerings), and acquire a significant amount of domestic and foreign investment for future development. Moreover, companies can further expand their capital in various ways, including initiating secondary market offerings and introducing private funding. In this sense, not only does an IPO generate capital for the company, but it also enables the company to acquire prolific capital, as long as the company operates profitably, and is able to attract investors.

Next, with JetBlue being a low-cost carrier, they are currently working on growth plans to help bring in more revenue. They face competition because other airlines are corporated with large corporations and major legacy carriers. JetBlue needs a massive network. If JetBlue can’t increase in size, it could lose market share while others keep increasing. JetBlue, knew that in order to keep up with other carriers, they had to escalate the number of commercial airline partnerships. The increase has led to more money revenue. Also, airport deliveries played a major role with problems that they were facing. JetBlue has not been around, as long as South West Airlines, American Airlines, United, and Delta Air Lines. That means that since they haven’t been around as long, they have to commit their time to trademark their name out and keep up positive feedback. For other aircrafts, it may be considered “older” aircrafts, but JetBlue had needed to brand out more aircrafts. If they did make too many planes and they were not used, it would cause them to either sell, park, or lease to other airlines.

Joint venture agreements are one of the most practical uses of a shareholders’ agreement. A joint venture may be formed between two or more persons or entities, and is used when the intended project is beyond the resources of the individual venturers, or where strategic alliances or cross-border arrangements are anticipated.10 Among other ways, joint ventures can be implemented by the incorporation of a limited liability company or the creation of a partnership. The corporate structure is often favored by joint venturers but the partnership or the contractual routes may be more appropriate for