Financial Analysis of Jet Blue (Case Study Sample)

FINANCIAL ANALYSIS ON JET BLUE
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INTRODUCTION, HISTORY AND BACKGROUND
Transportation has always remained an important and key issue and aspect in all of economies of the world, whether it’s an developing, under developed or developed one and in addition, whether it’s a matter of goods or cargo transportation or the human masses, both of these facets highly demands the availability of cheap, fast and comfortable mode of transportation, which is safe, secure and handy. With all this background in mind regarding the importance of transportation in the commercial and industrial globe, various technicians, experts, engineers and many more put their best efforts in order to bring something positive and fruitful for the entire humanity. Consequently and as the history proves, they were quite successful in devising many modes of transportation, including, railways, mass transit system via roads, seaways and most epic one of all is the air routes transportation.
As of now, most of the passengers widely travel from one corner of the world to others by selecting and choosing the varied modes of available air lines companies. Among those companies, one of the most popular and quite established air lines company is known with the name of JetBlue. It is a fairly large airways Corporation, which is occasionally symbolized as JetBlue by most of its stakeholders both locally and internationally. A company is an American airline corporation which is regarded as a low budgeted airline in its domestic and external territories, targeting to various middle class and upper middle class categories of customer segment under its overall market share. The headquarters of the company is located in the Long Island City, situated in the neighborhood of New York City borough of Queens .The main base of JetBlue airline is currently situated in the region of John F. Kennedy International Airport, which is also in Queens. However, it maintains and operates its corporate and business office in Cottonwood Heights, Utah (Yahoo Finance, 2014).
JetBlue was formed incorporated and established in August 1998 in Delaware, but however, the company was founded by David Neeleman in February 1999, with the name of NewAir. With several and most of JetBlue's executive’s level officers, encompassing Neeleman as well, are former employees of Southwest Airlines JetBlue and soon JetBlue initiated its very existence by following and inspiring with the working mechanisms of Southwest airlines in particular, with the extensive offering and providing of some low cost and cheap budget travel advantages to the passengers. But similarly, company’s also put its standards to bit distinct level and scale as compare to its competitors’ and other existing airlines at that point of time in a way, by its discrete scale of amenities, which includes, in-flight entertainment, Sirius satellite radio and TV at every seat, to point the major ones  (Investor.jetblue.com, 2014). And in the words of Neeleman's itself, JetBlue was the one to bring back humanity to air travel.
Moreover, in September 1999, Jet Blue acclaimed and awarded with the scales of 75 initial take off and landing slots at prestigious John F. Kennedy International Airport, and with that is also received the formal U.S. authorization in the period of February 2000. Finally, the airline has started off its operation from February 11, 2000, with services and amenities to Buffalo and Ft. Lauderdale in particular.
Jet Blue is primarily engaged in serving of its wise range of passengers to the regions and destinations including, all the major locations and air base in United States, and along with further flights to the locations of Caribbean, Barbados, Costa Rica, Colombia, The Bahamas, Jamaica, Bermuda, the Dominican Republic,  Mexico, Puerto Rico, Peru and few others as well. However, the statistics as per October 2013, the airline is pleased to serve more than 84 destinations in approximately 24 states and 12 nations in the regions of Caribbean, Latin America and South America (Fung, 2014). As of now, Jet Blue is enjoying the diversified range of partnerships and association agreements with some of the leading and elegant airlines companies of the world, including, Lufthansa, Aer Lingus (an Irish carrier), American Airlines and few others as well.
Furthermore, Jet Blue is a public listed company and is currently quoted at NASDAQ, a stock exchange company located in USA, where its equity securities, shares and scrip’s are freely traded and the symbol of the company is represented by JBLU (Marketwatch.com, 2014).
FINANCIAL ANALYSIS ON JET BLUE RECENT FINANCIAL PERFORMANCE AND STANDING
Current Ratio Analysis
Ratio20122013Current Ratio0.68 times0.57 times
The financial position and standing of Jet Blue depicted from the above current ratio analysis in the tabular form is not much satisfactory. The reason behind such comments is due to the fact that at present level the company do not have sufficient amount of current assets to meet its current obligation, which is about to due in one year’s times. However, as compare to the last year the company’s abilities to pay off its current obligations or liabilities out of its current scale of available assets, is significantly decline by 0.11 times.
Because, now the company only possess $ 57 of current assets in order to meet it $ 100 of current liabilities. Although, the position of company is much worried some but it can be improved if certain precautionary and managerial steps are effectively taken up by its higher management level and executive officers to enhance its current scale of liquidity issues in order to meet the demand of their short term creditors, suppliers and banks. In addition, the current ratio is the most basic aspect which is highly used by majority of stakeholders of any company, in order to analyze the current and future liquidity prospects of the company and also to ensure it’s going concerns aspects. Thus, the ratio should be regularly checked and kept in strict control to ensure the smooth and swift flow of cash flows of company on short term basis.
Profitability and profitability ratios
Ratio20122013Return on Assets8.82%9.78%Return on Equity33.05%33.69%
Profitability is the prime motive behind any entities operations and functions, other than organization not for profit purposes. Thus, the eyes of stakeholders of companies are highly intact on its profitability, improvement from previous years and its earnings per share. On the other hand, return on assets firmly indicates the stakeholders about the number of cents that has been earned by injecting an each dollar of assets in the operations of the company, and therefore, the higher worth of earnings or returns on assets substantially depicts that the business is climbing the steps of profitability ladder and its future is bright, strong and consistent (Accountingexplained.com, 2014).
Similarly, the returns on assets and returns on equity from the operations of Jet Blue over the past two years demonstrate a marginal rate of improvement in terms of its profitability return capability. Consequently, the company improves its return on assets ratios by almost 1% in 2013 as compared to 2012, and on the other hand, its return on equity ratio has also improves on similar levels by 0.64% in 2013 as compared to the previous years. Thus, the aggregate returns on both asset and equity levels have risen up from the current year’s operational performance of the company in particular.
Profitability ( in million $)2011GP = 1,050, Op. Income = 322, NP = 86 2012GP = 570, Op. Income = 376, NP = 1282013GP = 652, Op. Income = 428, NP = 168
The above tabular representation clearly displays the operational performance of Jet Blue over the past three years, which includes the figure of Gross Profit (GP), Operating Income (OI) and Net Profit (NP). The analysis comprehensively demonstrates that over the period Jet Blue performance is consistently increased in terms of its OI and NP, with considerable rate of growth for each year of its operations.
However, GP is reduced over the years but that decline is due to the company’s internal categorization of operating expenses charging of from Gross revenue. But, the bottom line which is represented by Net Profit figure has quite better prospects for Jet Blue in current year financial performance and thus, the company profitability scale and returns levels are quite satisfactorily as of now, which has also shown some considerable level of growth as well.
Debt ratio and operating performance ratio
Ratio20122013Debt Ratio56.55%49.79%Fixed Asset turnover ratio85.16%87.89%
Debt ratio basically explains the relationship between the components of long term debts and the components of equity participants of company. This ratio firmly explains the composition of debt, which is obtained or acquired by the company over the total of such debts and equity participants. Moreover, after the analysis of this ratio, one can clearly assessed the company capital formation structure in terms of its equity components and debt components (Readyratios.com, 2012).
Thus, when applying the concepts of debt ratio over Jet Blue, company has significantly displayed the reduction in its debt structure over the period of one year when compared to its debt ratio in 2012. In current year, Jet Blue has almost 50% of its capital resources being obtained from certain long term debts and other 50% from equity participants, which is quite a good sign from the company liquidity and future perspectives.
On the other hand, Jet Blue Fixed asset turnover ratio has ...