This spreadsheet supports STUDENT analysis of the case "JetBlue Airways IPO Valuation" (Case 45).

This spreadsheet was prepared by Professor Michael Schill. Copyright © 2004 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights
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the Darden School Foundation.

Rev. Jan. 20, 2011

JetBlue TN v3.0

This spreadsheet supports STUDENT analysis of the case,

"JetBlue Airways IPO Valuation" (UVA -F- 1415)

Revised, February 2007

Copyright (C) 2004, by the University of Virginia Darden School Foundation.
Exhibit 8
JETBLUE AIRWAYS IPO VALUATION
Historical Annual Growth Rates for Low Fare Airlines

$ Revenue Growth
Avg
Year AirTran ATA Frontier Ryanair Southwest Jet Blue

1970
1971
1972 -20%
1973 5%
1974 28%
1975 32%
1976 51%
1977 101%
1978 42%
1979 46%
1980 32%
1981 35%
1982 45%
1983 18%
1984 35%
1985 49%
1986 10%
1987 -5%
1988 24%
1989 14%
1990 10%
1991 14%
1992 20%
1993 1% 21%
1994 456% 21% 18%
1995 186% 18% 49% 13%
1996 -4% 2% 125% 20% 10%
1997 49% 20% 39% N/A 16%
1998 18% 21% 56% N/A 19%
1999 -20% 39% 105% 39% 19%
2000 35% 23% 79% 68% 16%
2001 -22% -58% 237% 12% 206%

Avg 35% 10% 98% 32% 24% 40% Avg

Source: Compustat
 $ Gross Equipment Growth
Avg
AirTran ATA Frontier Ryanair Southwest

177%
55%
61%
54%
35%
59%
66%
68%
57%
27%
23%
35%
20%
27%
13%
1%
11%
18%
17%
11%
28%
11% 36%
2204% 24% 13%
175% 23% 186% 11%
-40% 5% 66% 25% 19%
-4% 4% 26% 15% 12%
108% 17% 50% 29% 9%
15% 22% 50% 11% 14%
24% 15% 43% 21% 19%
7% -1% -6% -2%

41% 13% 59% 20% 33% 33%

Exhibit 7
JETBLUE AIRWAYS IPO VALUATION
Recent Valuation Multiples

JetBlue Shares Outstanding: 2,182,895

Actual for 2001

Book
Price/ Equity/ Book Debt/ EBITDA*/ EBIT/ Earnings/
Share Share Share Share Share Share
(1) (2) (3) (4) (5) (6)
AirTran 6.6 0.5 4.0 1.2 0.8 0.3
Alaska Air 29.1 32.1 33.8 3.3 -1.7 -1.5
America West 3.5 12.5 10.2 -4.3 -6.2 -4.4
AMR (American) 22.3 35.1 69.3 -7.0 -16.2 -11.5
ATA 15.0 10.8 32.9 8.5 -2.0 -2.6
Continental 26.2 20.9 82.0 9.8 1.4 -1.6
Delta 29.3 32.7 70.3 -1.4 -11.8 -9.9
Frontier 17.0 5.4 0.0 3.2 3.0 2.0
Midwest 14.6 8.3 2.7 -0.1 -1.6 -1.1
Northwest 15.7 -5.1 66.9 1.6 -4.4 -5.0
Ryanair 32.1 5.5 3.3 1.3 0.9 0.7
Southwest 18.5 5.3 1.8 1.5 1.1 0.7
United 13.5 59.6 186.2 -37.0 -56.1 -39.6
WestJet 15.9 2.8 1.0 2.1 1.3 0.8

Avg 18.5 16.2 40.3 -1.2 -6.5 -5.2

Low Fare Avg 14.8 4.6 7.0 2.6 0.6 0.2

Trailing
Market to
book Total Capital EBITDA EBIT PE
multiple multiple multiple multiple Multiple
[1/2] [(1+3)/(2+3)] [(1+3)/4] [(1+3)/5] [1/6]
AirTran 13.5 2.4 8.6 13.0 25.3
Alaska Air 0.9 1.0 19.2 -37.0 -19.3
America West 0.3 0.6 -3.2 -2.2 -0.8
AMR (American) 0.6 0.9 -13.1 -5.7 -1.9
ATA 1.4 1.1 5.6 -23.8 -5.7
Continental 1.3 1.1 11.0 77.0 -16.7
Delta 0.9 1.0 -71.6 -8.4 -3.0
Frontier 3.2 3.2 5.3 5.7 8.4
Midwest 1.8 1.6 -298.3 -11.0 -13.5
Northwest -3.1 1.3 51.6 -18.8 -3.1
Ryanair 5.8 4.0 26.4 38.5 44.0
Southwest 3.5 2.9 13.4 18.6 27.6
United 0.2 0.8 -5.4 -3.6 -0.3
WestJet 5.6 4.4 8.1 12.7 19.6

Avg 2.6 1.9 -17.3 3.9 4.3

Low Fare Avg 4.6 2.3 9.9 8.7 16.6

Data source: Actual numbers for 2001 are from company annual reports. Estimates for 2002 are from Valueline when available, otherwise
consensus analyst estimates are used. All stock prices are quoted as of December 31, 2001. Ryanair figures are based on the respective
American Deposit Receipt prices. Westjet figures are in Canadian dollars. 1 US dollar = 1.5870 Canadian dollars as of March 31, 2002. The
calculation procedure for the valuation multiples is defined in the lower panel based on the numbered variables defined in the upper panel.
Estimates for 2002

EBIT/ Earnings/
Share Share
(7) (8)
0.8 0.3
2.7 -0.8
-4.5 -4.1
12.4 -3.9
-6.4 -7.2
11.1 -1.2
8.4 -3.1
0.6 0.4
1.6 0.8
7.2 -2.5
1.2 0.9
1.4 0.7
NA -15.4
1.6 0.6

2.9 -2.5
-0.4 -0.8

Leading

EBIT PE
multiple Multiple
[(1+3)/7] [1/8]
13.9 20.0
23.3 -38.8
-3.0 -0.8
7.4 -5.7
-7.5 -2.1
9.8 -22.4
 11.8 -9.4
26.6 45.9
11.2 17.4
11.5 -6.3
30.3 34.1
14.3 28.4
NA -0.9
10.6 26.9

12.3 6.2
12.9 21.1

n available, otherwise
d on the respective
of March 31, 2002. The
ned in the upper panel.
Exhibit 13
JETBLUE AIRWAYS IPO VALUATION
JetBlue Financial Forecast

$ figures in millions Actual Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Number of aircraft 21 34 48 62 74 86 98 108 113 117

$ Revenue/plane $15.3 $17.6 $18.4 $19.2 $20.1 $21.0 $21.9 $22.8 $23.8 $24.9
Expected inflation 16% 4% 4% 4% 4% 4% 4% 4% 4%
Operating margin 8.4% 13.3% 15.2% 15.2% 15.2% 15.2% 15.2% 15.2% 15.2% 15.2%

$ Depreciation/plane $0.5 $0.5 $0.5 $0.6 $0.6 $0.6 $0.7 $0.7 $0.7 $0.8
$ CapEx/New planes $21.3 $22.3 $23.5 $24.6 $25.9 $27.1 $28.5 $29.9 $31.4 $33.0
Expected inflation 5% 5% 5% 5% 5% 5% 5% 5% 5%
NWC Turnover 9.4 9.4 9.4 9.4 9.4 9.4 9.4 9.4 9.4 9.4

Revenue $320 $600 $884 $1,192 $1,485 $1,802 $2,144 $2,466 $2,694 $2,912
Cash expenses 283 502 723 975 1,215 1,474 1,753 2,016 2,202 2,380
Depreciation 10 18 26 36 45 54 65 75 83 90
EBIT 27 80 134 181 226 274 326 375 410 443
Tax 34% 9 27 46 62 77 93 111 127 139 151
NOPAT 18 53 89 120 149 181 215 247 270 292

Capital expenditure 234 290 328 345 310 326 342 299 157 132
Net working capital 34 63 94 126 157 191 227 261 285 308
Fixed assets 530 802 1,104 1,413 1,679 1,950 2,227 2,451 2,526 2,568
Jetblue DCF

Use SWA WACC as a Proxy (This information is from South West Airlines Exhibit 5)
WACC
Equity
Risk Free Rate 5%
Market Risk Premium 5%
Beta (Proxy SWA) 1.1

CAPM 10.5%

Weight
Stock Price 20.69
Shares Outstanding 776,800,000
Market value of Equity 16,071,992,000
Equity Weight 89.01%
Enterprise Value
WACC 9.87%
Long Term Growth Rate (US GDP Growth 2.5%
Shares Outstanding (Mil) 35.1

Forecast Year Actual 1 2 3

2001 2002 2003 2004
EBIT 26.91 79.76 134.35 181.17
NOPAT 17.76 52.64 88.67 119.57
Depr. 10.42 17.71 26.25 35.60
Capital Expenditure 234.00 290.37 328.34 344.76
NWC Investments 29.56 30.08 32.60
FCF $ (249.58) $ (243.50) $ (222.19)
Present Value -227.16 -201.71 -167.52

Terminal Value $ 3,158.41

PV of Forecast & TV $ 695.49
(-) Debt $ 290.67
Value of Equity $ 404.83
Shares Outstanding (Mil) 35.10
Value Per Share $ 11.53

Multiples Valuation

Trailing EBIT Multiple Leading EBIT Multiple

EBIT 2001 26.91 EBIT 2002 79.76
Trail EBIT Multi 8.66 Lead EBIT Multi 12.92
Ent Value 233.12 Ent Value 1030.8124
(-)Debt 290.67 (-)Debt 290.67
Equity Value -57.54 Equity Value 740.15
Shares Outstanding 35.1 Shares Outstanding 35.1
Value per Share -1.64 Value Per Share 21.09
 Debt
Cost of Debt 6.91%
Tax 31%
Years to Maturity 10
Coupon 8%
After Tax Cost of Debt 4.77%

Total Debt 1,842,000,000

Market Value 1,983,465,600
Debt Weight 10.99%

Enterprise Value 18,055,457,600

4 5 6 7 8 9
2005 2006 2007 2008 2009 2010 Terminal
225.75 273.90 325.85 374.90 409.52 442.67
148.99 180.77 215.06 247.44 270.28 292.16
44.62 54.45 65.15 75.38 82.82 90.04
310.29 325.80 342.09 299.33 157.15 132.00
31.04 33.53 36.17 34.15 24.10 23.08
$ (147.71) $ (124.10) $ (98.05) $ (10.66) $ 171.85 $ 227.11 $ 3,158.41
-101.37 -77.51 -55.74 -5.52 80.93 97.34 1353.75

fREE cASH fLOW BY YEAR

$300

$200

$100
FCF (Mi l l i ons )

$0

-$100

-$200

-$300
1 2 3 4 5 6 7 8 9 10
 $100

FCF (Mi l l i ons )

$0

-$100

-$200

-$300
1 2 3 4 5 6 7 8 9 10

fORECAST yEAR