Swot Analysis of Jet Blue

Topics: Airline, Southwest Airlines, Low-cost carrier Pages: 6 (1653 words) Published: September 7, 2011
JetBlue find its strength from the following:

Strong Brand
JetBlue is considered as a strong brand widely known among the people of US. JetBlue was named the number one U.S. domestic airline by Coned Nast Traveler magazine’s “Readers’ Choice Awards” for the six years in a row. This further strengthen people’s trust to JetBlue and improves the company’s brand name and credibility among its clients and competitors.

Unique flying experience
JetBlue offers a new flying experience but at a very low cost. They adhere to their company’s goal belief which is bringing “Humanity Back to Air travel”. It follows the low cost strategy of Southwest Airlines but differentiate itself by facilitating customer with entertainment stuff. They give unique flying experience by providing new aircraft, simple and low fares, leather seats, free live TV at every seat, pre-assigned seatings, reliable performance, & high quality customer service. They are also focused on point to point service to large metropolitan areas with high average fares or highly traveled markets that were underserved.

Efficient Utilization of Resources
They formulated an operating strategy that had produced the lowest cost per available seat mile of any major US Airline in 2001 – 6.98 cents versus industry average of 10.08 cents. With its strong capital base, Jet Blue was able to acquire a fleet of new airbus A320 aircraft. Jet Blue’s fleet is not only reliable and fuel efficient than other airline fleets, but also attended greater “economies of scale”.

Strong people on top management, several JetBlue executives are former employees of Southwest Airlines. They have prior experience in managing airlines thus any mistakes committed before and caused negative impact on pioneer airlines can be avoided. They can use their previous experience to formulate policies and decisions to improve JetBlue.

With the help of Neeleman, the company was able to do E-ticketing using the system Open Skies, for the convenience of the passengers. With this, their passengers do not need to go directly to their ticketing offices, instead, they would be able to acquire their tickets online.

Assured Valuation of Capital Investment
Based on the computation of NPV, for both years, NPV is positive. This means that after paying its obligations, they investment still yield positive money. Thus, it should be accepted. Furthermore, profitability ratio is more than one which is favourable. Jet Blue may continue the business even though they receive minimal percentage of profitability because based on the computation there is a possibility of earning more in the future. Favorable Collection and Distribution

Based on the Stability Ratio analysis, Inventory days and collection, both possible sales (for the inventory) and collection (for the receivables) are not over 30 days. In fact, under inventory, it will only take 2 to 3 days to sell the tickets while account receivables collection will only take less than a month or 22 days to be exact.

Too Much Capital Borrowing
Based on the income statement analysis of the JetBlue, the company’s life initially relied on borrowing capital investment. In fact,

Too Much Debt
Based on the Leverage Ratio Analysis, huge percentage of the Total Assets is debt. By looking at its Balance Sheet, it can be seen that JetBlue had accumulated too much current and long term borrowings. By standard, capital investment borrowing should only amount to 30% to 40% but in JetBlue’s case, its debt amounts to 73.54%. This has a negative implication for the company. Too much debt will also mean an increase in interest expense that the business should pay adding to its principal obligation.

Negative Liquidity
Liquidity Ratios of JetBlue is unfavourable. In both years, current ratio and acid-test ratio of JetBlue is less than one. This implies that JetBlue’s asset is not enough to cover its...
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