JetBlue Airways IPO

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JetBlue Airways IPO

In April 2000, JetBlue first started in New York City’s John F. Kennedy Airport.

Even after the 2001 terrorist attacks, company remained profitable and was growing aggressively.

To support their growth and offset portfolio losses by their venture capital investors, management was ready to raise additional capital through a public equity offering.

With representatives of co-lead manager Morgan Stanley and the JetBlue board was trying to come to an agreement on the offering price of the new shares. The initial price range was from $22 to $24. Facing sizable excess demand for the 5.5 million shares planned in the IPO, management had recently filed an increase in the offering price range to $25 to $26. NASDAQ was prepared for JBLU (the company’s ticker symbol) to begin trading on the exchange.

JetBlue Airways

Ex-Continental Airlines vice-president, David Barger, had agreed to become the new JetBlue president and CEO.

John Owen had left his position as executive vice president and former treasurer for Southwest Airlines to fill the CFO role at JetBlue.

In 1999, David Neeleman, announced to launch a new airline. He had received strong support for his business plan from the venture capital community. He had quickly raised $130 million in funding from such high profile firms such as Weston Presidio Capital, Chase Capital Partners, and George Soros’s priv...

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...ed not only raising the short-term capital requirements, but also maintaining access to future capital raising and providing positive returns to the crewmembers and other s involved in direct IPO share purchases.

Since maintaining access to capital markets was considered vital to JetBlue’s aggressive growth plans, discounting the company’s IPO price seemed like a reasonable concession to ensure a successful deal and generate a certain level of investor buzz.

By 2002, the U.S. economy had been stalling for nearly two years. The Federal Reserve had attempted to stimulate economic activity by reducing interest a yield of 5%, short-term rates were at 2%, and the market risk premium was estimated to be 5%.

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