JetBlue Airways takes stock public
By Chris Woodyard
USA Today
The most successful start-up airline in years begins selling stock to the public today at a premium price, even as its bigger competitors are losing billions of dollars.
Bloomberg News Service
JetBlue Airways, a New York-based discounter that sets itself apart with touches such as live seatback television and blue snack chips, plans to offer 5.87 million shares, 300,000 more than previously announced, at $27 a share.
JetBlue has a fleet of 24 Airbus A320 planes, brand new when it began flying two years ago, and has plans to buy up to 108 more.
"It's Southwest with a little shine to it," says airline analyst Ray Neidl.
The airline has grown quickly since its start in February 2000. With most of its service on the East Coast, JetBlue increased the number of destinations it serves from 12 to 18 in the past year. It flies 24 new Airbus jets and has plans to buy up to 108 more.
Coast-to-coast fares are as low as $129 each way. More than half of its tickets are booked on its Web site.
JetBlue now has more available seats to domestic destinations at New York's John F. Kennedy International than previous leader American Airlines.
American has taken notice and is trying to counter JetBlue's attempts to expand on the West Coast. It added two daily flights between JFK and Oakland to counter JetBlue. Although American cut flights to Long Beach a year ago, it's now trying to expand at the airport, where JetBlue is trying to start a Southern California hub.
On June 15, American plans to match JetBlue's two flights to JFK and will restart service to Chicago, another possible JetBlue target.
But aviation consultant Mike Boyd says he thinks there's plenty of room for all competitors and that JetBlue is well positioned.
"Once people fly them, they have no problem flying them again," he says. The "only potential mistake" JetBlue could make is expanding too quickly, he says.
Morgan Stanley and Merrill Lynch, the lead pricing managers, raised the range of the offering earlier this week to $25 to $26, up from $22 to $24 a share, before bumping it up again Thursday. The offering could raise $158.5 million for the fast-expanding company.
Since its start, JetBlue has been a source of optimism at a time when the airline industry has absorbed billions of dollars in losses from recession, the aftermath of the terrorist attacks and jet fuel prices that have risen about 40 percent since December.
Profitable for four consecutive quarters, JetBlue earned $11.1 million in the fourth quarter, compared with a loss of $1.7 million in 2000's fourth quarter. Revenue doubled to $95.6 million in the same period.
"There's always room for a good business," says Marc Baum, managing director of the Seaport Group and former CEO of IPO.com.
He credits JetBlue as having experienced management that understands that customers appreciate better — or at least different — in-flight service.
