Crafting and Executing Strategy Essay

2428 Words Nov 19th, 2010 10 Pages
Crafting and Executing Strategy
Discuss the trends in the U.S. airline industry and how these trends might impact a company’s strategy The airline industry is facing one of its most difficult times in history. A worldwide recession along with the terrorist attacks of September 11, 2001 have led to a decrease in passenger traffic, reduction in revenue and rising fuel prices. Additionally, airline companies face the increase competition from new entrants. The shortage of pilots has also caused problems for the airline companies. In 2008 when the economy started to take a down turn, businesses began to cut back on employee travel, consumers were being more conscious about their spending. Airlines had to come up with a strategy by
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After the terrorist attacks, JetBlue was the first to install bullet proof cockpit doors across its fleet.
Discuss JetBlue’s financial objectives and whether or not the company has been successful in achieving this objective JetBlue’s financial objectives were to preserve liquidity and hedge its exposure to rising fuel prices. Jeb Blue had a strong first quarter in 2008 by maintaining strong liquidity. Its cash and cash equivalents totaled $713 million at the end of the first quarter of 2008. JetBlue had one of the best liquidity positions in the airline industry. Thompson, Strickland, & Gamble (2009) points out the company was within its target range of 20-25 percent of revenues. Some of the key elements of JetBlue’s liquidity consisted of favorable pricing and financing terms with minimal cash for all of JetBlue’s 2008 aircrafts. This favorable financing agreement did not impact JetBlue’s cash position. As a result of JetBlue’s cash position, JetBlue was able to obtain a $110 million line of credit from Citigroup Global Markets. “In January 2008, JetBlue issued 42.6 million new common shares to Deutsche Lufthansa AG for $301 million, net of transaction costs. This investment represented 19 percent of JetBlue’s common shares outstanding” (Thompson, Strickland, & Gamble, 2009, C-67). JetBlue hedged only 59 percent of its fuel consumption in 2007 compared to Southwest’s hedge of 90 percent. For 2008,

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