Finance Case Study 45
Title Page
| This spreadsheet supports STUDENT analysis of the case “JetBlue Airways IPO Valuation” (Case 45). |
| This spreadsheet was prepared by Professor Michael Schill. Copyright © 2004 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. For customer service inquiries, send an e-mail tosales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, posted to the Internet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation. |
| Rev. Jan. 20, 2011 |
Model Facts
| JetBlue TN v3.0 |
| This spreadsheet supports STUDENT analysis of the case, “JetBlue Airways IPO Valuation” (UVA -F- 1415) |
| Revised, February 2007 |
| Copyright (C) 2004, by the University of Virginia Darden School Foundation. |
Exhibit 7
| Exhibit 7 | ||||||||
| JETBLUE AIRWAYS IPO VALUATION | ||||||||
| Recent Valuation Multiples | ||||||||
| Actual for 2001 | Estimates for 2002 | |||||||
| Price/ Share | Book Equity/ Share | Book Debt/ Share | EBITDA*/ Share | EBIT/ Share | Earnings/ Share | EBIT/ Share | Earnings/ Share | |
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | |
| AirTran | 6.6 | 0.5 | 4.0 | 1.2 | 0.8 | 0.3 | 0.8 | 0.3 |
| Alaska Air | 29.1 | 32.1 | 33.8 | 3.3 | -1.7 | -1.5 | 2.7 | -0.8 |
| America West | 3.5 | 12.5 | 10.2 | -4.3 | -6.2 | -4.4 | -4.5 | -4.1 |
| AMR (American) | 22.3 | 35.1 | 69.3 | -7.0 | -16.2 | -11.5 | 12.4 | -3.9 |
| ATA | 15.0 | 10.8 | 32.9 | 8.5 | -2.0 | -2.6 | -6.4 | -7.2 |
| Continental | 26.2 | 20.9 | 82.0 | 9.8 | 1.4 | -1.6 | 11.1 | -1.2 |
| Delta | 29.3 | 32.7 | 70.3 | -1.4 | -11.8 | -9.9 | 8.4 | -3.1 |
| Frontier | 17.0 | 5.4 | 0.0 | 3.2 | 3.0 | 2.0 | 0.6 | 0.4 |
| Midwest | 14.6 | 8.3 | 2.7 | -0.1 | -1.6 | -1.1 | 1.6 | 0.8 |
| Northwest | 15.7 | -5.1 | 66.9 | 1.6 | -4.4 | -5.0 | 7.2 | -2.5 |
| Ryanair | 32.1 | 5.5 | 3.3 | 1.3 | 0.9 | 0.7 | 1.2 | 0.9 |
| Southwest | 18.5 | 5.3 | 1.8 | 1.5 | 1.1 | 0.7 | 1.4 | 0.7 |
| United | 13.5 | 59.6 | 186.2 | -37.0 | -56.1 | -39.6 | NA | -15.4 |
| WestJet | 15.9 | 2.8 | 1.0 | 2.1 | 1.3 | 0.8 | 1.6 | 0.6 |
| Trailing | Leading | |||||||
| Market to book multiple | Total Capital multiple | EBITDA multiple | EBIT multiple | PE Multiple | EBIT multiple | PE Multiple | ||
| [1/2] | [(1+3)/(2+3)] | [(1+3)/4] | [(1+3)/5] | [1/6] | [(1+3)/7] | [1/8] | ||
| AirTran | 13.5 | 2.4 | 8.6 | 13.0 | 25.3 | 13.9 | 20.0 | |
| Alaska Air | 0.9 | 1.0 | 19.2 | -37.0 | -19.3 | 23.3 | -38.8 | |
| America West | 0.3 | 0.6 | -3.2 | -2.2 | -0.8 | -3.0 | -0.8 | |
| AMR (American) | 0.6 | 0.9 | -13.1 | -5.7 | -1.9 | 7.4 | -5.7 | |
| ATA | 1.4 | 1.1 | 5.6 | -23.8 | -5.7 | -7.5 | -2.1 | |
| Continental | 1.3 | 1.1 | 11.0 | 77.0 | -16.7 | 9.8 | -22.4 | |
| Delta | 0.9 | 1.0 | -71.6 | -8.4 | -3.0 | 11.8 | -9.4 | |
| Frontier | 3.2 | 3.2 | 5.3 | 5.7 | 8.4 | 26.6 | 45.9 | |
| Midwest | 1.8 | 1.6 | -298.3 | -11.0 | -13.5 | 11.2 | 17.4 | |
| Northwest | -3.1 | 1.3 | 51.6 | -18.8 | -3.1 | 11.5 | -6.3 | |
| Ryanair | 5.8 | 4.0 | 26.4 | 38.5 | 44.0 | 30.3 | 34.1 | |
| Southwest | 3.5 | 2.9 | 13.4 | 18.6 | 27.6 | 14.3 | 28.4 | |
| United | 0.2 | 0.8 | -5.4 | -3.6 | -0.3 | NA | -0.9 | |
| WestJet | 5.6 | 4.4 | 8.1 | 12.7 | 19.6 | 10.6 | 26.9 | |
| Data source: Actual numbers for 2001 are from company annual reports. Estimates for 2002 are from Valueline when available, otherwise | ||||||||
| consensus analyst estimates are used. All stock prices are quoted as of December 31, 2001. Ryanair figures are based on the respective | ||||||||
| American Deposit Receipt prices. Westjet figures are in Canadian dollars. 1 US dollar = 1.5870 Canadian dollars as of March 31, 2002. The | ||||||||
| calculation procedure for the valuation multiples is defined in the lower panel based on the numbered variables defined in the upper panel. |
Exhibit 8
| Exhibit 8 | ||||||||||
| JETBLUE AIRWAYS IPO VALUATION | ||||||||||
| Historical Annual Growth Rates for Low Fare Airlines | ||||||||||
| $ Revenue Growth | $ Gross Equipment Growth | |||||||||
| Year | AirTran | ATA | Frontier | Ryanair | Southwest | AirTran | ATA | Frontier | Ryanair | Southwest |
| 1970 | ||||||||||
| 1971 | ||||||||||
| 1972 | -20% | 177% | ||||||||
| 1973 | 5% | 55% | ||||||||
| 1974 | 28% | 61% | ||||||||
| 1975 | 32% | 54% | ||||||||
| 1976 | 51% | 35% | ||||||||
| 1977 | 101% | 59% | ||||||||
| 1978 | 42% | 66% | ||||||||
| 1979 | 46% | 68% | ||||||||
| 1980 | 32% | 57% | ||||||||
| 1981 | 35% | 27% | ||||||||
| 1982 | 45% | 23% | ||||||||
| 1983 | 18% | 35% | ||||||||
| 1984 | 35% | 20% | ||||||||
| 1985 | 49% | 27% | ||||||||
| 1986 | 10% | 13% | ||||||||
| 1987 | -5% | 1% | ||||||||
| 1988 | 24% | 11% | ||||||||
| 1989 | 14% | 18% | ||||||||
| 1990 | 10% | 17% | ||||||||
| 1991 | 14% | 11% | ||||||||
| 1992 | 20% | 28% | ||||||||
| 1993 | 1% | 21% | 11% | 36% | ||||||
| 1994 | 456% | 21% | 18% | 2204% | 24% | 13% | ||||
| 1995 | 186% | 18% | 49% | 13% | 175% | 23% | 186% | 11% | ||
| 1996 | -4% | 2% | 125% | 20% | 10% | -40% | 5% | 66% | 25% | 19% |
| 1997 | 49% | 20% | 39% | N/A | 16% | -4% | 4% | 26% | 15% | 12% |
| 1998 | 18% | 21% | 56% | N/A | 19% | 108% | 17% | 50% | 29% | 9% |
| 1999 | -20% | 39% | 105% | 39% | 19% | 15% | 22% | 50% | 11% | 14% |
| 2000 | 35% | 23% | 79% | 68% | 16% | 24% | 15% | 43% | 21% | 19% |
| 2001 | -22% | -58% | 237% | 12% | 7% | -1% | -6% | -2% | ||
| Source: Compustat |
Exhibit 13
| Exhibit 13 | |||||||||||
| JETBLUE AIRWAYS IPO VALUATION | |||||||||||
| JetBlue Financial Forecast | |||||||||||
| $ figures in millions | Actual | Estimate | Estimate | Estimate | Estimate | Estimate | Estimate | Estimate | Estimate | Estimate | |
| 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | ||
| Number of aircraft | 21 | 34 | 48 | 62 | 74 | 86 | 98 | 108 | 113 | 117 | |
| $ Revenue/plane | $15.3 | $17.6 | $18.4 | $19.2 | $20.1 | $21.0 | $21.9 | $22.8 | $23.8 | $24.9 | |
| Expected inflation | 16% | 4% | 4% | 4% | 4% | 4% | 4% | 4% | 4% | ||
| Operating margin | 8.4% | 13.3% | 15.2% | 15.2% | 15.2% | 15.2% | 15.2% | 15.2% | 15.2% | 15.2% | |
| $ Depreciation/plane | $0.5 | $0.5 | $0.5 | $0.6 | $0.6 | $0.6 | $0.7 | $0.7 | $0.7 | $0.8 | |
| $ CapEx/New planes | $21.3 | $22.3 | $23.5 | $24.6 | $25.9 | $27.1 | $28.5 | $29.9 | $31.4 | $33.0 | |
| Expected inflation | 5% | 5% | 5% | 5% | 5% | 5% | 5% | 5% | 5% | ||
| NWC Turnover | 9.4 | 9.4 | 9.4 | 9.4 | 9.4 | 9.4 | 9.4 | 9.4 | 9.4 | 9.4 | |
| Revenue | $320 | $600 | $884 | $1,192 | $1,485 | $1,802 | $2,144 | $2,466 | $2,694 | $2,912 | |
| Cash expenses | 283 | 502 | 723 | 975 | 1,215 | 1,474 | 1,753 | 2,016 | 2,202 | 2,380 | |
| Depreciation | 10 | 18 | 26 | 36 | 45 | 54 | 65 | 75 | 83 | 90 | |
| EBIT | 27 | 80 | 134 | 181 | 226 | 274 | 326 | 375 | 410 | 443 | |
| Tax | 34% | 9 | 27 | 46 | 62 | 77 | 93 | 111 | 127 | 139 | 151 |
| NOPAT | 18 | 53 | 89 | 120 | 149 | 181 | 215 | 247 | 270 | 292 | |
| Capital expenditure | 234 | 290 | 328 | 345 | 310 | 326 | 342 | 299 | 157 | 132 | |
| Net working capital | 34 | 63 | 94 | 126 | 157 | 191 | 227 | 261 | 285 | 308 | |
| Fixed assets | 530 | 802 | 1,104 | 1,413 | 1,679 | 1,950 | 2,227 | 2,451 | 2,526 | 2,568 |
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