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DardenBusinessPublishing:203497;UVA-F-1415;Rev. Jun. 30, 2011;This document is authorized for use only by Aren Dergrigorian at CSU Pomona.;Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions.;JETBLUE AIRWAYS IPO VALUATION;My neighbor called me the other day and she said, You have an interesting little;boy. Turns out, the other day she asked my son Daniel what he wanted for;Christmas. And he said, I want some stock. Stock? she said. Dont you want;video games or anything? Nope, he said. I just want stock. JetBlue stock.;David Neeleman;CEO and Founder, JetBlue Airways;It was April 11, 2002, barely two years since the first freshly painted JetBlue plane had;been rolled out at the companys home base at New York Citys John F. Kennedy Airport (JFK).;JetBlues first years had been good ones. Despite the challenges facing the U.S. airline industry;following the terrorist attacks of September 2001, the company remaine d profitable and was;growing aggressively. To support JetBlues growth trajectory and offset portfolio losses by its;venture-capital investors, management was ready to raise additional capital through a public;equity offering. Exhibit 1 through Exhibit 4 provide selections from JetBlues initial public;offering (IPO) prospectus, required by the SEC to inform investors about the details of the equity;offering.;After nearly two weeks of road-show meetings with the investment community, the;JetBlue management team had just finished its final investor presentation and was heading for;Chicagos Midway Airport. With representatives of co-lead manager Morgan Stanley and the;JetBlue board patched in on a conference call, it was time for the group to come to an agreement;on the offering price of the new shares. The initial price range for JetBlue shares, communicated;to potential investors, was $22 to $24. Facing sizable excess demand for the 5.5 million shares;planned for the IPO, management had recently filed an increase in the offerings price range ($25;to $26). But even at that price range, most of the group thought the stock faced blow -out;demand. After months of preparation, it was time to set the price. The underwriters were anxious;to distribute the shares that evening, and NASDAQ was prepared for JBLU (the companys;ticker symbol) to begin trading on the exchange in the morning.;This case was prepared by Professor Michael J. Schill with the assistance and cooperation of John Owen (JetBlue);Garth Monroe (MBA 05), and Cheng Cui (MBA 04). It was written as a basis for class discussion rather than to;illustrate effective or ineffective handling of an administrative situation. Copyright 2003 by the University of;Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to;sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system;used in a spreadsheet, or transmitted in any form or by any meanselectronic, mechanical, photocopying;recording, or otherwisewithout the permission of the Darden School Foundation.;Page 1 of 20;DardenBusinessPublishing:203497;-2 -;UVA-F-1415;This document is authorized for use only by Aren Dergrigorian at CSU Pomona.;Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions.;JetBlue Airways;In July 1999, David Neeleman, 39, announced his plan to launch a new airline that would;bring humanity back to air travel. Despite the fact that the U.S. airline industry had witnessed;87 new-airline failures over the previous 20 years, Neeleman was convinced that his;commitment to innovation in people, policies, and technology could keep his planes full an d;moving.1 His vision was shared by an impressive new management team and a growing group of;investors. David Barger, a former vice president of Continental Airlines, had agreed to become;JetBlues president and COO. John Owen had left his position as exec utive vice president and;former treasurer of Southwest Airlines to become JetBlues CFO. Neeleman had received strong;support for his business plan from the venture-capital community. He had quickly raised $130;million in funding from such high-profile firms as Weston Presidio Capital, Chase Capital;Partners, and Quantum Industrial Partners (George Soross private-equity firm).;In seven months, JetBlue had secured a small fleet of Airbus A320 aircraft and initiated;service from JFK to Fort Lauderdale, Florida, and Buffalo, New York. By late summer of 2000;routes had been added to two other Florida cities (Orlando and Tampa), two other northeastern;cities (Rochester, New York, and Burlington, Vermont), and two California cities (Oakland and;Ontario). The company continued to grow rapidly through early 2002, and was operating 24;aircraft flying 108 flights per day to 17 destinations.;JetBlues early success was often attributed to Neelemans extensive experience with;airline start-ups. As a University of Utah student in his early 20s, Neeleman began managing;low-fare flights between Salt Lake City and Hawaii. His company, Morris Air, became a pioneer;in ticketless travel, and was later acquired by low-fare leader Southwest Airlines. Neeleman;stayed only briefly at Southwest, leaving to assist in the launching of Canadian low -fare carrier;WestJet while waiting out the term of his noncompete agreement with Southwest.;Simultaneously, Neeleman also developed the e -ticketing system Open Skies, which was;acquired by Hewlett-Packard in 1999.;Neeleman acknowledged that JetBlues strategy was built on the goal of fixing;everything that sucked about airline travel. He offered passengers a unique flying experience;by providing new aircraft, simple and low fares, leather seats, free LiveTV at every seat;preassigned seating, reliable performance, and high -quality customer service. JetBlue focused on;point-to-point service to large metropolitan areas with high average fares or highly traveled;markets that were underserved. JetBlues operating strategy had produced the lowest cost per;available-seat-mile of any major U.S. airline in 20016.98 cents versus an industry average of;10.08 cents.;With its strong capital base, JetBlue had acquired a fleet of new Airbus A320 aircraft.;JetBlues fleet not only was more reliable and fuel -efficient than other airline fleets, but also;afforded greater economies of scale because the airline had only one model of aircraft. JetBlue s;management believed in leveraging advanced technology. For instance, all its pilots used laptop;1;Jeff Sweat, Generation Dot-Com Gets Its Wings, Information Week (January 1, 2001).;Page 2 of 20;DardenBusinessPublishing:203497;-3 -;UVA-F-1415;This document is authorized for use only by Aren Dergrigorian at CSU Pomona.;Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions.;computers in the cockpit to calculate the weight and balance of the aircraft and to access their;manuals in electronic format during the flight. JetBlue was the first U.S. airline to equip cockpits;with bulletproof Kevlar doors and security cameras in response to the September 11 hijackings.;JetBlue had made significant progress in establishing a strong brand by seeking to be;identified as a safe, reliable, low-fare airline that was highly focused on customer service and by;providing an enjoyable flying experience. JetBlue was well positioned in New York, the nations;largest travel market, with approximately 21 million potential customers in the metropolitan area.;Much of JetBlues customer-service strategy relied on building strong employee morale throu gh;generous compensation and passionately communicating the companys vision to employees.;The Low-Fare Airlines;In 2002, the low-fare business model was gaining momentum in the U.S. airline industry.;Southwest Airlines, the pioneer in low-fare air travel, was the dominant player among low-fare;airlines. Southwest had successfully followed a strategy of high-frequency, short-haul, point-topoint, low-cost service. Southwest flew more than 64 million passengers a year to 58 cities;making it the fourth-largest carrier in America and in the world. Financially, Southwest had also;been extremely successfulin April 2002, Southwests market capitalization was larger than all;other U.S. airlines combined (Exhibits 5 and 6 provide financial data on Southwest Airlines).;Following the success of Southwest, a number of new low-fare airlines emerged. These;airlines adopted much of Southwests low-cost model, including flying to secondary airports;adjacent to major metropolitan areas and focusing on only a few types of aircraft to minimize;maintenance complexity. In addition to JetBlue, current low -fare U.S. airlines included AirTran;America West, ATA, and Frontier. Alaska Air, an established regional airline, was adopting a;low-fare strategy. Many of the low-fare airlines had been resilient in the aftermath of the;September 11 attacks. (Exhibit 7 shows current market-multiple calculations for U.S. airlines.);Low-fare airlines had also appeared in markets outside the United States, with Ryanair and;easyJet in Europe and WestJet in Canada. (Exhibit 8 provides historical growth rates of revenue;and equipment for low-fare airlines.);The most recent IPOs among low-fare airlines were of non-U.S. carriers. Ryanair;WestJet, and easyJet had gone public with tra iling EBIT multiples of 8.5, 11.6, and 13.4;respectively, and first-day returns of 62%, 25%, and 11%, respectively.2;2;The first-day return was the realized return based on the difference between the IPO share price and the;market share price at the close of the first day of exchange -based trading. The term trailing EBIT (earnings before;interest and taxes) multiple was defined as (Book debt + IPO price Post-IPO shares outstanding)/(Most recent;years EBIT). The term leading EBIT multiple referred to an EBIT multiple based on a future years forecast;EBIT.;Page 3 of 20;DardenBusinessPublishing:203497;-4 -;UVA-F-1415;This document is authorized for use only by Aren Dergrigorian at CSU Pomona.;Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions.;The IPO Process;The process of going public (selling publicly traded equity for the first time) was an;arduous undertaking that usually required about three months. Exhibit 9 provides a timeline for;the typical IPO.3 A comment on the IPO process by JetBlue CFO John Owen can be found at;http://it.darden.virginia.edu/JetBlue/streaming_links.htm.;Private firms needed to fulfill a number of prerequisites before initiating the equityissuance process. Firms had to generate a credible business plan, gather a qualified management;team, create an outside board of directors, prepare audited financial statements, performance;measures, and projections, and develop relationships with investment bankers, lawyers, and;accountants. Frequently, firms held bake-off meetings to discuss the equity-issuance process;with various investment banks before selecting a lead underwriter. Important ch aracteristics of;an underwriter included the proposed compensation package, track record, analyst research;support, distribution capabilities, and aftermarket market -making support.;After the firm satisfied the prerequisites, the equity-issuance process began with an;organizational or all-hands meeting, which was attended by all the key participants, including;management, underwriters, accountants, and legal counsel for both the underwriters and the;issuing firm. The meeting was designed for planning the process and reaching agreement on the;specific terms. Throughout the process, additional meetings could be called to discuss problems;and review progress. Following the initiation of the equity-issuance process, the Securities and;Exchange Commission (SEC) prohibited the company from publishing information outside the;prospectus. The company could continue established, normal advertising activiti es, but any;increased publicity designed to raise awareness of the companys name, products, or;geographical presence in order to create a favorable attitude toward the companys securities;could be considered illegal. This requirement was known as the quiet period.;The underwriters counsel generally prepared a letter of intent, which provided most of;the terms of the underwriting agreement but was not legally binding. The underwriting;agreement described the securities to be sold, set forth the rights and obligations of the various;parties, and established the underwriters compensation. Because the underwriting agreement;was not signed until the offering price was determined (just before distribution began), both the;firm and the underwriter were free to pull out of the agreement anytime before the o ffering date.;If the firm did withdraw the offer, the letter of intent generally required the firm to reimburse the;underwriter for direct expenses.;The SEC required that firms selling equity in public markets solicit its approval. The;filing process called for preparation of the prospectus (Part I of the registration statement);answers to specific questions, copies of the underwriting contract, company charter and bylaws;3;This section draws from Michael C. Bernstein and Lester Wolosoff, Raising Capital: The Grant Thornton LLP;Guide for Entrepreneurs, Frederick Lipman, Going Public, Coopers and Lybrand, A Guide to Going Public, and;Craig G. Dunbar, The Effect of Information Asymmetries on the Choice of Underwriter Compensation Contracts in;IPOs (PhD diss., University of Rochester, n.d.).;Page 4 of 20;DardenBusinessPublishing:203497;This document is authorized for use only by Aren Dergrigorian at CSU Pomona.;Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions.;-5 -;UVA-F-1415;and a specimen of the security (all included in Part II of the registration statement), all of which;required the full attention of all parties on the offering firms team. One of the important features;of the registration process was the performance of due-diligence procedures. Due diligence;referred to the process of providing reasonable grounds that there was nothing in the registration;statement that was significantly untrue or misleading, and was motivated by the liability of all;parties to the registration statement for any material misstatements or omissions. Due-diligence;procedures involved such things as reviewing company documents, contracts, and tax returns;visiting company offices and facilities, soliciting comfort letters from company auditors, and;interviewing company and industry personnel.;During this period, the lead underwriter began to form the underwriting syndicate;which comprised a number of investment banks that agreed to buy portions of the offering at the;offer price less the underwriting discount. In addition to the syndicate members, dealers were;enlisted to sell a certain number of shares on a best-efforts basis. The dealers received a fixed;reallowance, or concession, for each share sold. The selling agreement provided the contract;among members of the syndicate. The agreement granted power of attorney to the lead;underwriter, and stipulated the management fee that each syndicate member was required to pay;the lead underwriter, the share allocations, and the dealer reallowance s or concessions. Because;the exact terms of the agreement were not specified until approximately 48 hours before selling;began, the agreement did not become binding until just before the offering. The original contract;specified a range of expected compensation levels. The selling agreement was structured so that;the contract became binding when it was orally approved via telephone by the syndicate;members after the effective date.;The SEC review process started when the registration statement was filed and the;statement was assigned to a branch chief of the Division of Corporate Financ e. As part of the;SEC review, the statement was given to accountants, attorneys, analysts, and industry specialists.;The SEC review process was laid out in the Securities Act of 1933, which aspired to provide;full and fair disclosure of the character of securities sold in interstate commerce.4 Under the;Securities Act, the registration statement became effective 20 days after the filing date. If;however, the SEC found anything in the registration statement that was regarded as materially;untrue, incomplete, or misleading, the branch chief sent the registrant a letter of comment;detailing the deficiencies. Following a letter of comment, the i ssuing firm was required to correct;and return the amended statement to the SEC. Unless an acceleration was granted by the SEC;the amended statement restarted the 20-day waiting period.;While the SEC was reviewing the registration statement, the underwriter was engaged in;book-building activities, which involved surveying potential investors to construct a sched ule;of investor demand for the new issue. To generate investor interest, the preliminary offering;prospectus, or red herring (so called because the prospectus was required to have Preliminary;Prospectus on the cover in red ink), was printed and offered to potential investors. Underwriters;generally organized a one- or two-week road-show tour during this period. The road shows;allowed managers to discuss their investment plans, display their management potential, and;4;Preamble, Securities Act of 1933.;Page 5 of 20;DardenBusinessPublishing:203497;-6 -;UVA-F-1415;This document is authorized for use only by Aren Dergrigorian at CSU Pomona.;Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions.;answer questions from financial analysts, brokers, and institutional investors in locations across;the country or abroad. Finally, companies could place tombstone ads in various financial;periodicals announcing the offering and listing the members of the underwriting syndicate.;By the time the registration statement was ready to become effective, the underwriter and;the offering firms management negotiated the final offering price and the underwriting discount.;The negotiated price depended on perceived investor demand and current market conditions;(e.g., price multiples of comparable companies, previous offering experience of industry peers).;Once the underwriter and the management agreed on the offering price and discount, the;underwriting agreement was signed, and the final registration amendment was filed with the;SEC. The company and the underwriter generally asked the SEC to accelerate the final pricing;amendment, which was usually granted immediately over the telephone. The offering was now;ready for public sale. The final pricing and acceleration of the registra tion statement typically;happened within a few hours.;During the morning of the effective da y, the lead underwriter confirmed the selling;agreement with the members of the syndicate. Foll owing confirmation of the selling agreement;selling began. Members of the syndicate sold shares of the offering through oral solicitations to;potential investors. Because investors were required to receive a final copy of the prospectus;with the confirmation of sale and the law allowed investors to back out of purchase orders upon;receipt of the final prospectus, the offering sale was not realized until underwriters actually;received payment. Underwriters would generally cancel orders if payment was not received;within five days of the confirmation.;SEC Rule 10b-7 permitted underwriters to engage in price-stabilization activities for a;limited period during security distribution. Under this rule, underwriters often post ed stabilizing;bids at or below the offer price, which provided some price stability during the initial trading of;an IPO.;The offering settlement, or closing, occurred seven to ten days after the effective date, as;specified in the underwriting agreement. At this meeting, the firm delivered the security;certificates to the underwriters and dealers, and the lead underwriter delivered the prescribed;proceeds to the firm. In addition, the firm traditionally delivered an updated comfort letter from;its independent accountants. Following the offering, the underwriter generally continued to;provide valuable investment-banking services by distributing research literature and acting as a;market maker for the company.;The IPO Decision;There was some debate among the JetBlue management team rega rding the appropriate;pricing policy for the IPO shares. Morgan Stanley reported that the deal was highly;oversubscribed by investors (i.e., demand exceeded supply). Analysts and reporters were;overwhelmingly enthusiastic about the offering. (Exhibit 10 contains a selection of recent;Page 6 of 20;DardenBusinessPublishing:203497;-7 -;UVA-F-1415;This document is authorized for use only by Aren Dergrigorian at CSU Pomona.;Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions.;comments by analysts and reporters.) Given such strong demand, some members of the group;worried that the current pricing range still left too much money on the table. Moreover, they;believed that raising the price would send a strong signal of confidence to the market.;The contrasting view held that increasing the price might compromise the success of the;deal. In managements view, a successful offering entailed not only raising the short -term capital;needs, but also maintaining access to future capital and providing positive returns to the crew;members (employees) and others involved in directed IPO share purchases. Because maintaining;access to capital markets was considered vital to JetBlues aggressive growth plans, dis counting;the companys IPO price seemed like a reasonable concession to ensure a successful deal and;generate a certain level of investor buzz. Being conservative on the offer price seemed;particularly prudent considering the risks of taking an infant New York airline public just six;months after 9/11. (Exhibit 11 provides forecasts of expected aggregate industry growth and;profitability, Exhibit 12 shows the share-price performance of airlines over the past eight;months.);By April 2002, the U.S. economy had been stalled for nearly two years. The Federal;Reserve had attempted to stimulate economic activity by reducing interest rates to their lowest;level in a generation. Current long-term U.S. Treasuries traded at a yield of 5 %, short-term rates;were at 2%, and the market risk premium was estimated to be 5%.;Based on the JetBlue management teams forecast of aircraft acquisitions, Exhibit 13;provides a financial forecast for the company.5;5;In pricing IPO shares, it was appropriate to divide the total equity value of the firm by the premoney shares;outstanding. In the case of JetBlue, the number of premoney shares outstanding was 35.1 million. This number;included the automatic conversion of all convertible redeemable preferred shares into common shares.;Page 7 of 20;DardenBusinessPublishing:203497;-8 -;UVA-F-1415;Exhibit 1;JETBLUE AIRWAYS IPO VALUATION;This document is authorized for use only by Aren Dergrigorian at CSU Pomona.;Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions.;Selections from JetBlue Prospectus;The Offering;Common stock offered;5,500,000 shares;Use of proceeds;We intend to use the net proceeds, together with existing cash, for working;capital and capital expenditures, including capital expenditures related to the;purchase of aircraft.;Dividends;We have not declared or paid any dividends on our common stock. We;currently intend to retain our future earnings, if any, to finance the further;expansion and continued growth of our business.;Proposed NASDAQ National Market symbol;JBLU;Results of Operations;Three Months Ended;Dec 31, 2000;Mar 31, 2001;Jun 30, 2001;Sep 30, 2001;Dec 31, 2001;(unaudited);Operating Statistics;Revenue passengers;523,246;644,419;753,937;791,551;926,910;Revenue passenger miles (in thousands);469,293;600,343;766,350;863,855;1,051,287;Available seat miles (in thousands);623,297;745,852;960,744;1,131,013;1,370,658;Load factor;75.3%;80.5%;79.8%;76.4%;76.7%;Breakeven load factor;79.4%;73.2%;70.6%;74.6%;76.2%;11.8;13.1;13.1;12.8;11.8;$ 90.65;$ 96.15;$ 101.01;$ 101.66;$ 99.37;10.11;10.32;9.94;9.29;8.76;Passenger revenue per available seat mile (cents);7.61;8.31;7.93;7.10;6.72;Operating revenue per available seat mile (cents);7.85;8.56;8.16;7.30;6.97;Operating expense per available seat mile (cents);8.03;7.55;7.01;6.93;6.68;Aircraft utilization (hours per day);Average fare;Yield per passenger mile (cents);Departures;4,620;5,283;6,332;6,936;7,783;Average stage length (miles);833;871;937;1,007;1,087;Average number of operating aircraft during period;9.2;10.5;13.2;15.9;19.4;2,116;Full-time equivalent employees at period end;Average fuel cost per gallon (cents);Fuel gallons consumed (in thousands);Percent of sales through jetblue.com during period;1,028;1,350;1,587;1,876;103.38;86.03;83.24;79.53;60.94;8,348;9,917;12,649;14,958;17,571;32.6%;37.6%;39.4%;45.1%;51.3%;Page 8 of 20;This document is authorized for use only by Aren Dergrigorian at CSU Pomona.;Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permiss;-9-;UVA-F-1415;Exhibit 2;JETBLUE AIRWAYS IPO VALUATION;Balance Sheets of JetBlue Airways;(in thousands of dollars);December 31;2001;2000;ASSETS;Cash and cash equivalents;Receivables, less allowance;Inventories, less allowance;Prepaid expenses and other;Total current assets;Flight equipment;Predelivery deposits for flight;equipment;Less accumulated depreciation;Other property and equipment;Less accumulated depreciation;Total property and equipment;Other Assets;Total Assets;$117,522;20,791;2,210;3,742;144,265;364,681;125,010;$34,403;21,633;1,133;2,744;59,913;163,060;91,620;489,691;9,523;480,168;29,023;4,313;24,710;504,878;24,630;254,680;2,334;252,346;18,290;1,632;16,658;269,004;15,211;$673,773;$344,128;Page 9 of 20;December 31;2001;2000;LIABILITIES;Accounts payable;Air traffic liability;Accrued salaries, wages and benefits;Other accrued liabilities;Short-term borrowings;Current maturities of long-term debt;$24,549;51,566;18,265;15,980;28,781;54,985;$12,867;27,365;5,599;5,255;15,138;24,800;Total current liabilities;Long Term Debt;Deferred Credits & Other Liabilities;Convertible Redeemable Preferred Stock;194,126;290,665;10,708;210,441;91,024;137,110;6,595;163,552;COMMON STOCKHOLDERS EQUITY;Additional paid-in capital;Accumulated deficit;Unearned compensation;Total common stockholders equity;(deficit);Total Liabilities & Common Stockholders;Equity;44;3,889;(33,117);(2,983);44;487;(54,684);(32,167);(54,153);$673,773;$344,128;DardenBusinessPublishing:203497;-10-;UVA-F-1415;Exhibit 3;This document is authorized for use only by Aren Dergrigorian at CSU Pomona.;Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions.;JETBLUE AIRWAYS IPO VALUATION;Statements of Operations of JetBlue Airways;(in thousands of dollars, except per-share amounts);Year Ended December 31;2001;Operating Revenues;Passenger;Other;Total Operating Revenues;Operating Expenses;Salaries, Wages and Benefits;Aircraft Fuel;Aircraft Rent;Sales and Marketing;Landing Fees and Other Rents;Depreciation and Amortization;Maintenance Materials and Repairs;Other Operating Expenses;Total Operating Expenses;Operating Income (Loss);Other Income (Expense);Airline Stabilization Act Compensation;Interest Expense;Capitalized Interest;Interest Income and Other;Total Other Income (Expense);Income (Loss) Before Income Taxes;Income Tax Expense (Benefit);Net Income (Loss);Preferred Stock Dividends;Net Income (Loss) Applicable to;Common Stockholders;Earnings (Loss) Per Common Share;Basic;Diluted;Pro forma basic (unaudited);2000;$310,498;9,916;320,414;$101,665;2,953;104,618;84,762;41,666;32,927;28,305;27,342;10,417;4,705;63,483;293,607;26,807;32,912;17,634;13,027;16,978;11,112;3,995;1,052;29,096;125,806;(21,188);6,000;4;324;887;447;111;38;6,405;14,216;(14,216);18,706;(14,132);8,043;2,491;15,108;41,915;3,378;38,537;(16,970);(7,395);4,487;2,527;(381);(21,569);(239);(21,330);(14,092);(705);705;685;685;(13,531);233;(13,764);(4,656);$21,567;($35,422);($18,420);$9.88;$1.14;$1.30;($27);($27);($37);($37);Page 10 of 20;1999;$;DardenBusinessPublishing:203497;-11-;UVA-F-1415;Exhibit 4;This document is authorized for use only by Aren Dergrigorian at CSU Pomona.;Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions.;JETBLUE AIRWAYS IPO VALUATION;Statements of Cash Flows of JetBlue Airways;(in thousands of dollars);2001;Cash Flows From Operating Activities;Net income (loss);Adjustments to reconcile net income (loss) to net cash;provided by (used in) operating activities;Depreciation;Amortization;Deferred income taxes;Other, net;Changes in certain operating assets and liabilities;Decrease (increase) in receivables;Increase in inventories, prepaid expenses and other;Increase in air traffic liability;Increase in accounts payable and other accrued liabilities;Net cash provided by (used in) operating activities;Cash Flows From Investing Activities;Capital expenditures;Predelivery deposits for flight equipment, net;Increase in security deposits;Purchases of short-term investments;Proceeds from maturities of short-term investments;Other, net;Net cash used in investing activities;Cash Flows From Financing Activities;Proceeds from issuance of convertible redeemable preferred stock;Proceeds from issuance of common stock;Proceeds from issuance of long-term debt;Proceeds from short-term borrowings;Proceeds from aircraft sale and leaseback transactions;Repayment of long-term debt;Repayment of short-term borrowings;Other, net;Net cash provided by financing activities;Increase In Cash And Cash Equivalents;Cash and cash equivalents at beginning of year;Cash and cash equivalents at end of year;Page 11 of 20;Year Ended December 31;2000;1999;$38,537;($21,330);($13,764);9,972;445;3,373;5,960;3,889;106;3,892;111;619;430;(2,120);23,788;30,894;111,279;(21,622);(3,354);26,173;15,070;2,824;(340);6,818;(6,556);(233,775);(54,128);(1,952);(289,855);(205,759);(27,881);(7,939);(20,923);21,392;(20);(241,130);(12,463);(50,713);(5,302);1,026;(67,452);29,731;25;185,000;28,781;72,000;(35,254);(15,138);(3,450);261,695;83,119;34,403;$117,522;51,322;130;137,750;15,138;70,000;(18,577);(1,300);254,463;16,157;18,246;$34,403;80,671;69;80,740;6,732;11,514;$18,246;DardenBusinessPublishing:203497;-12-;UVA-F-1415;Exhibit 5;JETBLUE AIRWAYS IPO VALUATION;This document is authorized for use only by Aren Dergrigorian at CSU Pomona.;Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions.;Selections from Value Line Tear Sheet for Southwest Airlines;Recent stock price;P/E ratio;Dividend yield;Beta;Financial statement forecast;Total debt (in millions);Revenue (in millions);Operating margin;Tax rate;Common shares outstanding (in;millions);$20.69;49.3;0.1%;1.10;2001;2002E;2003E;2005E/2007E;$1,842;$5,555;17.1%;31.0%;776.8;$6,000;18.0%;38.5%;785.0;$7,100;24.5%;38.5%;795.0;$10,300;27.0%;38.5%;815.0;Page 12 of 20;DardenBusinessPublishing:203497;-13-;UVA-F-1415;Exhibit 6;JETBLUE AIRWAYS IPO VALUATION;This document is authorized for use only by Aren Dergrigorian at CSU Pomona.;Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions.;Southwest Airlines: Current Debt Outstanding;Moodys;Rating;Amount;Outstanding;Maturity;Date;Yield to;Maturity;Short-term bank debt;NA;$475 million;NA;NA;Floating rate secured notes;NA;$200 million;2004;NA;Private notes 5.10-6.10;NA;$614 million;2006;NA;Floating rate French Bank debt;NA;$52 million;2012;NA;8.75 Note;Baa1;$100 million;Oct-2003;5.65%;8.00 Note;Baa1;$100 million;Feb-2005;5.91%;7.875 Debenture;Baa1;$100 million;Sep-2007;7.41%;7.375 Debenture;Baa1;$100 million;Feb-2027;8.68%;NA;$109 million;NA;NA;Issue;Capital leases;Data source: Mergents Bond Record, Southwest Annual Report.;Page 13 of 20;DardenBusinessPublishing:203497;-14-;UVA-F-1415;Exhibit 7;JETBLUE AIRWAYS IPO VALUATION;This document is authorized for use only by Aren Dergrigorian at CSU Pomona.;Please do not copy or redistribute. Contact permissions@dardenbusinesspu

 

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