Title Page
| 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 reserved. For customer service inquiries, send an e-mail tosales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, posted to the Internet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation. |
| Rev. Jan. 20, 2011 |
Model Facts
| 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. |
DCF
| 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 |
| Change in net working capital |
29.557 |
30.076 |
32.599 |
31.039 |
33.526 |
36.172 |
34.152 |
24.102 |
23.083 |
| FCF |
(249.58) |
(243.50) |
(222.19) |
(147.71) |
(124.10) |
(98.05) |
(10.66) |
171.85 |
227.11 |
4403.7903098882 |
| DCF |
-227.1189464669 |
-201.6444583011 |
-167.4369763218 |
-101.2962961843 |
-77.448411784 |
-55.6839624642 |
-5.5096463969 |
80.8179430638 |
97.1948569405 |
1884.6406954022 |
| NPV |
1226.5147974874 |
| Less: preferred stock |
-210.44 |
| Less: long term debt |
-301.373 |
| add: cash |
117.522 |
| equity value |
832.2237974874 |
| shares |
40.6 |
| WACC |
9.89% |
| Price |
20.4981230908 |
WACC
| southwest capital structure |
| market value of debt |
1,842 |
ex 5 |
| shares outstanding |
776.8 |
ex5 |
| stck price |
20.69 |
ex5 |
| market value of equity |
16,071.99 |
| financing total |
17,914 |
| SW D/E ratio |
0.11 |
| Jetblue Beta |
| SW levered beta |
1.1 |
ex5 |
| SW unlevered beta |
1.02 |
| SW tax rate |
31% |
ex5 |
| Jetblue tax rate |
34% |
ex13 |
| Jetblue D/E ratio |
0.31 |
estimated using median total capital ex6 |
| Jetblue levered beta |
1.24 |
| Jetblue cost of capital |
| pretax cost of debt |
6.91% |
YTM of SW 5yr debunture |
| tax rate |
34% |
ex13 |
| after tax cost of debt Kd |
4.56% |
| Dividend preferred stock |
16,970,000 |
ex3 |
| convertible preferred stock |
210,441,000 |
ex2 |
| cost of preferred stock Kp |
8.1% |
| Equity beta |
1.24 |
| Risk free rate Rf |
5% |
current long term u.s treasury, Pg 623 text |
| market risk premium Rm-Rf |
5% |
market risk premium, Pg 623 text |
| cost of equity Ke |
10.5% |
| Weight of debt Wd |
10.28% |
| weight of preferred stock Wp |
8% |
| weight of equity We |
89.7% |
| WACC |
9.89% |
