Jetblue Airways Starting from Scratch

8436 Words Nov 5th, 2012 34 Pages
HARVARD

BUSINESS

SCHOOL

9-801-354 REV: OCTOBER 29. 2001

JODY HOPPER GITTELL CHARLES O'REILL Y

Where have you heard this before? We're starting tickets and go to the big cities.'

a new low-fare airline.

We're going to offer low-fare

-Financial
If you want to be a millionaire, start with a billion dollars and launch a new airline: -Richard Branson, Founder, Virgin

Analyst

Atlantic

Airways

Keep an eye on ]etBlue.

That could prove to be a successful operation.3 -Herb Kelleher, Co-founder,

CEO, Southwest

Airlines

Ann Rhoades looked up from the stack of papers in front of her and gazed out the window. She watched with pride as a JetBlue plane lifted off from Kennedy Airport. She knew from the
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In 2000,only 17 of theseremained in operation. Experts were mixed in their outlook for the company. One airline analyst who was positive, commented that "When the big boys do as terrible a job as they've been doing, of course guys like ]etBlue have a chance.1I another airline But observer was less sanguine. lIlt's a really risky business to take on these eight-hundred pound gorillas. You have to be a little nuts to want to do thiS.IIS
David Neeleman

David Neeleman,the founder of JetBlue,had gotten his start in the airline businessin 1984when he partnered with June and Mitch Morris to run the Southwest Airlines' look-alike, Morris Air. Neelemanraised $20 million in venture capital from Michael Lazarus of the Weston Presidio group, and in just over one year increasedthe value of Morris Air from approximately $59 million to $130 million.
Herb Kelleher, CEO of Southwest Airlines, watched the growth of Morris Air and its route network centered in Salt Lake City, Utah, and made Southwest's first and only acquisition to date. Southwest Airlines was the most prominent success story in the U.S. airline industry , and had always prided itself on growing from within at a steady rate of 12% to 18% per year. But Morris Air was so similar to Southwest, by design, that Kelleher believed the merger would be a success. Neeleman and the Morris family sold Morris Air to Southwest Airlines in 1993, and Neeleman joined
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