Jet Blue Case Study

Topics: Stock market, Corporate finance, Stock Pages: 4 (1140 words) Published: September 20, 2013
1.0 Introduction
Airline industry is a high capitalization industry and its development is also highly depended by investment. JetBlue, a young generation in airline, started its first step in 1998 and made excellent performance after that, but due to the negative effect by “911 terrorist attack” to airline industry, JetBlue was considering going public by (initial public offering) IPO. This report evaluates the Board’s decisions accomplishing with some related principles of IPO.

2.0 Basic Definition and Advantages / Disadvantages of IPO
IPO is a kind of offering where company sells its shares to general public in an exchange market for the first time ( Edmonston 2009). IPOs are often issued by small companies or young companies to seek fund for their future expansion. After a successful IPO, that company obtained a large amount of additional fund and managers could use it to make more strategic plans, it means that company enters into a new period of development. However, IPO transforms a private company into a public company and the management structure of a company may be changed as well, therefore IPO accomplishes high future uncertainty and it may become a challenge for a firm. These are the reasons why IPO is a big deal. Going public will benefit the company itself a lot. By using IPO, the company could obtain a large amount of fresh fund for development as discussed above. Secondly, it will increase public awareness through the promotion activities before IPO and that may increase its market share same as the effect of advertisement. Moreover, going public allow firms to attract higher level managers and finally, it is an important method of acquisition. Beside these merits, public listing firms may face a lot of new challenges as well. Because it is no longer owned by private investors, the border of directors needs to disclose its financial performance frequently to public and they must follow lots of new regulations to meet the requirement, these...
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