JetBlue Assignment: Case - JetBlue Airways: Managing Growth

The file "JetBlue ROIC Trees Worksheet.xlsx" presents two ROIC Trees, one modeling the operations in 2006 and one modeling the operations as of April 2007.

The ROIC in 2006 is estimated to be 1.91%. However, you need to update the April 2007 sheet, prior to analyzing the current operations. The values you need to adjust are in the YELLOW highlighted cells. You may want to use the file JetBlueFigures.xlsx to do so.

Part 1: Adjusting the numbers

1. You may assume JetBlue has 100 A320's and 26 E190's as of the April 2007. Adjust the "Base 2007" number of aircraft to express these numbers.

2. JetBlue removed six seats from the A320's in 2006. Please adjust the number of seats.

3. Using Exhibit 1 in the case, estimate the price of fuel in 2007.

4. Using Exhibit 9, find the following values for both the A320 and the E190

A. Flights per aircraft per day

i. Find the total number of flights per day for each aircraft type. Note that a round trip consists of two flights.

ii. Divide by the number of each aircraft.

B. Average Miles per Flight

i. Find the total number of miles flown per day for each aircraft type.

ii. Divide by the number of flights per day for each aircraft type.

C. Yield (Revenue per passenger mile)

i. Find the revenue per passenger mile FOR EACH ORIGIN-DESTINATION PAIR (i.e., each row in Exhibit 9) for each aircraft type by multiplying the revenue per available seat mile by the number of seats for each aircraft type (assume 150 seats for A320 and 100 seats for E190), and then divide by the average number of passengers given.

ii. Find the revenue per day FOR EACH ORIGIN-DESTINATION PAIR for each aircraft type by multiplying the revenue per passenger mile by the number of miles, the number of passengers, and the number of flights to get the revenue for each flight by type of aircraft.

iii. Find the total revenue per day for each aircraft type by summing over all flights.

iv. Find the number of passenger miles per FOR EACH ORIGIN-DESTINATION PAIR for each aircraft type by multiplying the number of miles, the number of passengers and the number of flights.

v. Find the total number of passenger miles for each aircraft type by summing over all flights.

vi. Divide the total revenue by the total number of passenger miles to get the yield for each aircraft type.

D. Load Factor (Passengers miles/available seat miles)

i. Find the number of available seat miles (ASM) FOR EACH ORIGINDESTINATION PAIR for each aircraft type by multiplying the number of seats times the number of miles and the number of flights.

ii. Find the total number of ASM for each aircraft by summing over all flights.

iii. Divide the total number of passenger miles by the total ASM to get the load factor for each aircraft type.

5. PLEASE SUBMIT A SINGLE SHEET PDF OF THE FINAL ROIC AFTER ALL ADJUSTMENTS HAVE BEEN MADE AS AN ATTACHMENT TO YOUR CASE ANALYSIS.

Part 2: Analyzing the ROIC

Explain what has happened to the ROIC from 2006 to 2007 by referencing the changes in the number of flights per day, yield, load factor, fuel price, and flight length. Which of these has had the greatest effect on the ROIC, i.e., which are Key Performance Indices? (1-2 paragraphs).

Part 3: MAIN QUESTION: JetBlue Strategy Going forward

The December 2006 growth plan shown in Exhibit 11 indicates that JetBlue would acquire 12 A320's and 10 E190's in 2007, leading to a growth in ASM's by 14% - 17% over the 28594 million ASM flown in 2006. As of April 2007, the airline has acquired 4 A320's and 3 E190's. In May 2007 as the new CEO, David Barger needs to consider how to continue to growth the airline, now with somewhat lower expectations on the ASM growth.

Prepare a 1-2 page Executive Action Summary on the JetBlue case focusing on the Main Issue: Should JetBlue continue to grow its fleet using E190's or A320's or a mix?

In answering the main question consider the following related questions:

• What are the factors affecting your choice?
• How has the E190 changed JetBlue's strategy?
• How has the E190 changed JetBlue's operations?
• Are there any flights flown currently by A320's for which the E190 is better suited?
• Are there any flights flown currently by E190's for which the A320 is better suited?

Executive action summaries are short, one- to two-page reports highlighting the main conclusions of your analysis of a case with respect to the main challenge faced by the firm. In writing the executive action summaries, you should observe the following guidelines.

1. All executive action summaries should be typewritten and one to two pages long (around 750-1,000 words).

2. Avoid repeating case facts, except when necessary to support an argument.

3. Support your statements and conclusions with adequate analyses and arguments.

4. You may attach additional pages of exhibits (data, figures, quantitative analysis, etc.) to your summary if needed to support your conclusions.

Assignments will be marked both objectively for the numerical parts of the assignment and subjectively based on your answer to the MAIN question in the case. Your answers to the MAIN question will be graded based on:

• Relevant: Are your answers linked to the case questions?
• Fact-based: Have you used specific data or analyses to support your assertions?
• Specific: Are you making specific points rather than being vague?
• Logical: Is your reasoning consistent and logical?
• Insightful: Do your answers merely restate the facts or do they provide new insights?

Attachment:- Assignment Files.rar