JetBlue to file IPO
 

Hmmm.... David Neeleman wants to raise some more money? Looks like he's in for the long haul...

http://biz.yahoo.com/bw/020212/122504_1.html

Yea - saw this this morning - doesn't give many specifics as to which exchange, timing, etc. They must be hardup for cash, 'cause I don't think this is the best market to launch an IPO.. especially in transportation securities..

I read an article not too long ago where JetBlue was supposed to finalize their IPO in Sept. 2001 but 9/11 postponed everything.

Even with the IPO market being poor, I think JetBlue is making the right decision. Having the IPO now, while their BUZZ is still good, makes sense.

They've been profitable, even without the taxpayer money, and the market has noticed how well the smaller carriers were able to respond to 9/11. Quite the opposite to the "hard up for cash" comment. I think they are using the IPO as a springboard to solidify their position....

Making myself an analyst for a minute:

Why would an airline IPO today?

1. They have a story and "mo" and think the institutional investment market will respond
2. They can take advantage of the fact that IPO entries are really down right now
3. There are things happening that are likely to negatively impact earnings in coming quarters - so even though they can expect nervous investors of the day to be shy and their pricing party to fall flat, it will still be probably better today than a year from now.
4. They already made a commitment to the IPO and to not follow through now might be interpreted as weakness - nahhh
5. You're the stuff, your EPS proforma is the stuff, and your IB is horny to bring you to the dance.

So what's JetBlue's story?

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Would that be an analyst who by chance works for the very same company that is also underwriting the IPO? http://www.flyertalk.com/forum/wink.gif



[This message has been edited by doc (edited 02-12-2002).]

Here's why IMO they are doing the IPO at this time. BTW, they were ready to go with the IPO announcement on 9/12 and pulled it.

The folks who put money with JetBlue include George Soros and a number of other venture capital investors. These VC guys have not had a great amount of good news recently nor healthy companies in which they had invested. Taking the company public (presumably at a valuation at least 2 or 3 times VC's cost) will allow the VC to show their investors some better returns on their capital.

JetBlue is growing, profitable, has no debt, and is a pax favorite. Its a company that should be IPO'ed at this time. There is no sense in having another VC financing round, since no VC would get much bang for the buck now. The biggest upside in a company is when it goes from start up to profitability. Since there is less risk in the company now that it is profitable, and less return potential, VC's will opt to take it public rather than invest with a lower return opportunity.

I suspect that the cache, or perceived "hipness" of JetBlue, its profitability, its expected growth, and its management team will make this an IPO with a great deal of retail and institutional demand. Investors will think they can get into a Southwest-like company at a much earlier phase.

I'd be in, at the right price.

msn - what is the "right" price?

darn right... who wouldn't love to have had the chance to be in on the ground floor of southwest?

Does anyone know when they were certificated by the FAA--is this a post ValuJet start-up, or a previous flying airline with a new name. I am just curious because a very insightful person told me that he did not expect the FAA to certificate any new airlines after the ValuJet crash (or at least would make it so difficult to obtain a certificate that as a practical matter there would be no new airlines).

JetBlue is a post ValuJet startup, built from scratch. They've been in service for 2 years now, if I'm not mistaken. Yes they had to jump thru much tighter hoops than ValuJet did to get their operating certificate. Hard to believe that someone would think the FAA would NEVER approve a new airline again because of ValuJet. Never is an awful long time!

Great comments! Admittedly, this is an industry I have not followed, and I know nothing about the financial metrics of JetBlue.

So you're saying 1,2, & 5 apply. I may just buy a buck's worth of this stock http://www.flyertalk.com/forum/smile.gif

svp -

make sure you read the prospectus carefully before deciding to buy. The airline biz is a difficult one to invest in, usually because of the uncertainty over fuel prices, cyclicality, and the issue of labor unions. No unions to worry about in JetBlue's case. And IMO, they are not as subject to the cyclicality because they are adding routes that are popular with their clientele. I'd also check their load factors for newer cities versus existing cities. That should tell you how they are doing on the growth track. Similar to looking at same store sales of Wal-Mart versus new store sales.

What you have to do is make sure the stock is fairly priced according to other airline companies (Southwest, Skywest, RyanAir and the other Europe based start ups, etc. - not AMR, UAL, DAL, CAL, NWAC) and also make your judgement as to the competency of the management team to execute the growth strategy that has gotten them to this point to date.

http://www.lihistory.com/jetblue.htm#02NYC1452_1

click above for some deep reading

In this prospectus, we use the terms "JetBlue," "we," "us" and "our" to refer to JetBlue Airways Corporation.