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JetBlue stock soars on its opening day
Compiled from Times wires NEW YORK -- JetBlue, the upstart airline that attracts passengers with low fares and leather seats, showed Friday it also has appeal on Wall Street. Shares of JetBlue Airways Corp. rose nearly 67 percent to close at $45 in its market debut on the Nasdaq Stock Market. The jump gives the 2-year-old airline a market value twice that of United Airlines, the nation's second-largest carrier. "We knew it was going to be a hot deal," said Helane Becker, an analyst at Buckingham Research. The company's shares, trading under the symbol JBLU, were originally expected to price between $22 and $24, but the figure was raised based on its underwriters' belief that investor demand for the stock was higher than the supply. "It's trading so high on the fact that it's been the most hyped IPO that has come along in a while," Becker said. JetBlue sold 5.87-million shares at $27 apiece Thursday night. The public now owns about 14 percent of a company valued at $1.8-billion. In comparison, United parent UAL Corp. has a market capitalization of $874-million, and US Airways Group Inc. is valued at $440 million. The two carriers have a total 1,000 planes, compared with JetBlue's 23. JetBlue said it had net income of $38.5-million in 2001, a year in which the major carriers racked up billions in dollars of losses because of the slump in business travel and the impact of Sept. 11. The airline keeps costs at 6.98 cents per available seat mile, compared with an industry average of 10.08 cents, in part by using only one type of aircraft for its fleet and flying long-haul, non-stop routes, investors said. "Looking at JetBlue's business model -- point to point, low fare and low cost -- who besides Southwest (Airlines) would be better poised to capture the upside" of a pickup in travel spending?, said Robert Mann of RW Mann & Co., a consulting firm on airline economics to pilots and other groups. JetBlue makes four daily non-stop flights from Tampa International, all to New York's John F. Kennedy International Airport. Last year, the airline carried 276,000 customers between the two cities, nearly 2 percent of TIA's total passengers. Founder David Neeleman says the airline is modeled after Southwest, the low-fare leader and a carrier he knows well. Neeleman helped launch Morris Air, a small carrier based in Salt Lake City that followed Southwest's blueprint of keeping operations simple and lean by flying only Boeing 737 jets and flying from point to point instead of through busy hubs. In 1994, Southwest bought Morris in its only acquisition ever. But JetBlue hardly shared Southwest's humble beginnings. Neeleman raised $130-million in capital funding and ordered 75 new aircraft from Airbus Industrie, worth $4-billion. Two years after its first flight from JFK International to Fort Lauderdale, JetBlue has 23 A-320 jet and expects to take 11 more this year. The airline has built a loyal following with New York-Florida flights as cheap as $69 and 24-channel satellite TV at every seat. In a filing with the Securities and Exchange Commission, JetBlue said running the company could get more expensive as time goes on. JetBlue expects "maintenance costs to significantly increase as our fleet ages, and we may experience greater labor costs in the future," the company said in its SEC filing. The funds raised from the initial public offering will be used by JetBlue to add 59 new Airbus A320s by the end of 2007. -- Times staff writer Steve Huettel contributed to this report, which includes information from the Associated Press and Bloomberg News.
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From the Times Business report
From the AP
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