JetBlue

Case Solution for JetBlue Airways IPO Valuation

Complete Case details are given below :

Case Name :      JetBlue Airways IPO Valuation
Authors :           Michael J. Schill, Garth Monroe, Cheng Cui
Source :             Darden School of Business
Case ID :           UV2512
Discipline :        Finance
Case Length :    20 pages
Solution Sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
This case examines the April 2002 decision of JetBlue management to price the initial public offering of JetBlue stock during one of the worst periods in airline history. The case outlines JetBlue’s innovative strategy and the associated strong financial performance over its initial two years. Students are invited to value the stock and take a position on whether the current $22-$24 per share filing range is appropriate. The case is designed to showcase corporate valuation using discounted cash flow and peer-company market multiples. The epilogue details the 67% first-day rise in JetBlue stock from the $27 offer price. With such a backdrop, students are exposed to one of the well-known finance anomalies–the IPO underpricing phenomenon–and are invited to critically discuss various proposed explanations.
 
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Case Solution for 2012 Fuel Hedging at JetBlue Airways

Complete Case details are given below :

Case Name :      2012 Fuel Hedging at JetBlue Airways
Authors :           Pedro Matos
Source :             Darden School of Business
Case ID :           UV6682
Discipline :        Finance
Case Length :    24 pages
Solution Sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
At the start of 2012, Helena Morales, an equity analyst, was examining the jet fuel hedging strategy of JetBlue Airways for the coming year. Airlines cross-hedged their jet fuel price risk using derivatives contracts on other oil products such as WTI and Brent crude oil. Consequently, an airline was exposed to basis risk. In 2011, dislocations in the oil market led to a Brent-WTI premium wherein jet fuel started to move with Brent instead of WTI, as it traditionally did. Faced with hedging losses, several U.S. airlines started to change their hedging strategies, moving away from WTI. But others worried that the Brent-WTI premium might be a temporary phenomenon. For 2012, would JetBlue continue using WTI for its hedges, or would it switch to an alternative such as Brent?
 
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