CASE STUDY # 1
PROF. AHSAN DURRANI
IMRAN UL HAQUE (4282)
Q.NO.4 WHAT IS YOUR ASSESSMENT OF JETBLUE`S FINANCIAL PERFORMACE DURING FISCAL YEARS 2003-2007? ANALYZE THE FOLLOWING RATIO`S.
| 2007 | 2006 | 2005 | 2004 | 2003 |
Gross Profit Margin | | | | | |
Operating Profit Margin | 0.0595 | 0.0537 | 0.0282 | 0.0877 | 0.1673 |
Net Profit Margin | 0.0063 | (0.00042) | (0.01176) | 0.0364 | 0.103 |
Return on Total Assets | 0.0398 | 0.032 | 0.0394 | 0.0949 | 0.1984 |
Return on Stockholder Equity | 0.017 | (0.0011) | (0.022) | 0.061 | 0.154 |
Earnings Per Share | 0.10 | - | (0.13) | 0.30 | 0.71 |
Current Ratio | 1:0.89 | 1:1.085 | ...view middle of the document...
It grew 658% over the period to finance the company`s expanded operations. JetBlue`s net interest expense was 6% of operating revenues.
Lower % of cash to total assets
In the 2007 balance sheets shown that JetBlue had a strikingly lower percentage of cash to total assets.
JetBlue`s long-term debt comprised 46% of total assets.
1. WHAT WAS DAVID NEELEMAN’S ORIGINAL STRATEGIC VISION FOR JETBLUE? SHOULD JETBLUE’S STRATEGIC VISION BE REVISED NOW THAT THE COMPANY HAS NEW EXECUTIVE LEADERSHIP?
Established a low fares airline
David Neeleman’s idea behind JetBlue was to start a company that combined the low fares of a discount airline carrier with the comforts of a small cozy den in people’s homes. Passengers would be able to save money while they munched on gourmet snacks, satin leather seats and watched television. Many of JetBlue`s original design principles came from Neelemman`s own personal experiences.
Motivation factors for comforts
He added leather seats because he once got assigned to a fabric seat on an airplane that was soaked with urine. He realized that leather seats were not only more durable but also easier to clean.
Motivation for entertainment
To make air travel entertaining he decided to offer 24-channel live television via satellite-for free. Individual monitors were installed in all seats.
Cheap and affordable flights
His vision involved customers (both business and leisure) to have cheap and affordable flights throughout the United States and abroad on newer aircraft that are not only comfortable, but are equipped with modern entertainment options, and a customer centric business model which makes customer service a number 1 priority.
JetBlue’s strategic vision should only be revised to further enhance the original vision and to incorporate new technologies and options which will facilitate growth and profitability. David Neeleman stepped down after the Valentine’s Day incident in 2007 only because his organization failed to deliver on its principles of excellent customer service.
The change of management was instituted to help rebuild JetBlue’s tarnished reputation and to develop innovative strategies which would prevent situations like that from ever happening again.
JetBlue’s vision is solid and with the exception of that incident the organization would not have been forced to change management. However in light of that incident incorporating new technologies, best practices and providing comprehensive cross-training to all employees will allow the company to remain competitive throughout the years.
The new management team needed to put in place new operating procedures, communication systems and information technology solutions to prevent another weather related debacle. It needed to deal with rising jet fuel process and the emergence of new competitors just as it was making the transition from a start-up airline to a major domestic carrier.