Strategic Management Case Analysis
Introduction to the Company
History of the Firm
JetBlue was established in 1999, and was the third airline start-up for founder and CEO David Neeleman. Neeleman managed to gather $130 million, the most ever raised for a start-up airline, from investors that included Chase Capital and financier George Soros. With the large start-up capital he purchased new Airbus A320 jets equipped with satellite TV, a first in the industry. In 2004 the company ordered an additional 30 new A320 aircrafts from Airbus. The airlines first flight was from New York to Fort Lauderdale in 2000. During the year, the airline added nine more destinations in California, Florida, New York, Utah, and Vermont. By 2001 the airline was operating 20 new A320s with an ambitious 131 on order (JetBlue Airways Corporation, n.d.).
The terrorist attack of September 11, 2001 crippled the airline industry, however, JetBlue continued to expand its network, and it went public in 2002. JetBlue added nine new destinations in 2004, including Boston. They further expanded in 2005 offering the company’s first non-stop coast-to-coast route from Burbank, California to JFK. In 2007, the company partnered with Yahoo, Research in Motion, and LiveTV to provide complementary in-flight email and instant messaging services. The same year, JetBlue and Lufthansa entered into an agreement by which Lufthansa purchased 19% of JetBlue. Mission Statement and Vision Statement
JetBlue’s “mission of bringing humanity back to air travel” (Jetblue Airways 2006 Annual Report, n.d.) is supported by their core values of safety, caring, integrity, fun, and passion. JetBlue’s vision is to establish itself as the leading U.S. low-fare carrier. Since their first official flight on February 11, 2000, their primary goal has been to grow enough to be successful, but to remain small enough to preserve their original strategic direction. Corporate Governance & Key Players
Key information on the corporate governance of Jet Blue Airways is presented in Appendices 1-3. Appendix 1 provides an overview of the Board of Directors. Appendix 2 introduces the reader to the top management team. Appendix 3 reviews the Standing Board Committee Composition for the audit, compensation, and corporate governance committees. Jet Blue Airways has painstakingly followed guidelines from the Sarbanes-Oxley Act to institute clear charters for each committee. Further, the company has implemented a code of business for the entire organization conduct and a code of ethics for its board members. A major director holder of Jet Blue Airways is Deutsche Lufthansa AG with 19% of equity or 42 million common shares (2007 Annual Report on 10K, 2008, February 19, p. 66). Major institutional investors include Manning and Napier Advisors, Thornburg Investment Management, Primecap Management, and Capital World Investors (Appendix 4; Jet Blue Airways Corporation Major Holders, n.d.). Major goals and objectives
JetBlue’s major goals and objectives are to offer a low fare, low cost passenger airline that provides high quality customer service, and to build an organization where the employees take pride in their company (JetBlue Airways 2006 Annual Report, n.d.). Present strategy/strategies
Some of JetBlue’s most important strategies are:
•Limiting operating costs
•Flying with a new Airbus A30 Fleet
•Developing a quality brand
•Hiring dedicated employees
•Pursuing the latest technology
Its overall strategy has been to identify routes with high average fares and beat the competition price, as well as to distinguish itself with service offerings such as TV and radio programming. Identification of the Industry
The passenger airline industry in the U.S. is comprised of three segments: major carriers, regional carriers, and low-cost airlines. Currently there are 16 major carriers, the largest of which are American, Continental, Delta, Northwest, Southwest, and...