Jet Blue Case

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JetBlue

Contents

Memorandum3

Summary of Strategy Assessment and Identification of Strategic Issues3

Key Strategic Issue, Options and Recommendations for Action3

Best Option Recommendation4

I. Case Update (Exhibit 1)5

Bibliography7

II. JetBlue’s Strategy in Detail (Exhibit 2)8

Mission/Purpose/Vision8

Goals/Objectives9

Major Policies9

III. JetBlue’s SWOT Analysis (Exhibit 3)11

IV. Analysis of JetBlue’s Financial Performance (Exhibit 4)12

2010 vs. 2009 Sources and Uses Analysis12

2008-2010 Horizontal and Vertical Analyses of Income Statement13

2008-2010 Ratio Analyses14

VI. Assessment of JetBlue’s Strategy (Exhibit 6)17

Built-in Contradictions17

Most Relevant Strengths, Weakness, Opportunities & Threats18

Key Industry Success Factors19

Competitive Edge20

Financial Performance20

Where are we now?22

VIII. JetBlue Recent Awards (Exhibit 8)25

Memorandum

To: David Barger (CEO), JetBlue
From: EBA Strategy Consulting Inc.

Summary of Strategy Assessment and Identification of Strategic Issues

After carefully analyzing JetBlue’s strategy we have found several built-in contradictions, which are outlined in Exhibit 6. While the current strategy of differentiation and maintaining low operational costs has been a contributing factor to overall profitability, it does not address the competitive advantage sustainability. Easy product and service imitation, along with highly competitive industry environment, will force JetBlue to continuously look for ways to reduce operational costs and increase revenue, while maintaining the competitive advantage that JetBlue has capitalized on during the last decade. In Exhibit 3 you will find a SWOT analysis, which summarizes strengths, weaknesses, opportunities and threats that JetBlue will have to address. JetBlue’s key strength and its competitive edge, currently lies in product and customer service differentiation as well as its low pricing structure. The combination of these three factors has been able to satisfy current market needs and “bring humanity to air travel”.

Key Strategic Issue, Options and Recommendations for Action

JetBlue’s core strategy of maintaining low operational costs through automated processes, use of technology, a young fleet, and an efficient workforce is currently being implemented successfully. Since the current strategy has provided JetBlue with a competitive advantage, it should be continuously enforced; however it does not guarantee the advantage’s sustainability. At this time the key strategic issue for JetBlue is sustaining its competitive advantage in the industry. Below you will find additional options on how JetBlue can maintain its competitive edge, many of which JetBlue has started to put in practice, but should expand on:

|Option |PRO of Option |CON of Option | | Increase Oil Hedging | Leveraging the fuel prices will reduce | Diminished liquidity may pose an operational| | |costs, protect against oil price volatility |threat in an economic downturn. | | |and provide better predictability for future | | | |cash flows. | | |Product & Service Differentiation |Keep and attract new customers by offering a |Once the success is proven it can be easily | | |differentiated product. |imitated by the other airlines. | |Strategic Partnerships (with airlines, |Increase in exposure, marketing, market |Implementation and management of...
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