jetBlue Airways Corporation

Firm Valuation

Travis Steele

jetBlue is overvalued by 2.4%

• The current market price for jetBlue is $6.84, our valuation prices the company at $6.68

• jetBlue’s performance to date has been driven by offering innovative amenities and lower fares for consumers

• Strong trend towards increasing operating margins and efficiency

• In the long term jetBlue will lose its competitive advantage, but will maintain market share through brand loyalty

• jetBlue’s creative marketing strategy will help maintain strong revenue growth

2

Key macro drivers of industry profitability and demand

4The Airline Industry The Company Marketing Outlook Valuation

Airlines are emerging from the worst decade in industry history

5

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

$0.05 $0.06 $0.07 $0.08 $0.09 $0.10 $0.11 $0.12 $0.13 $0.14 $0.15

Revenue per Avg. Seat Mile vs. Cost per Avg. Seat Mile

RASM

CASM

Data Source: US DOT Form 41 via BTS, Schedule P12; US DOT Form 41 P-12, Account 9899.

The Airline Industry The Company Marketing Outlook Valuation

7/11/08- Oil Reaches record high of $147.27 per barrel

9/11 Terrorist Attacks

Financial Crisis

In the past decade, low cost carriers have gained market share

6

South-west, 59%jetBlue, 19%

AirTran, 13%

Frontier, 6%

Virgin America, 3%

Low Cost Carriers

Legacy

Car-riers, 80%

Low Cost Car-riers, 16%

Other, 4%

All Sectors

Data Source: US DOT Form 41 via BTS, Schedule P12.

Total Market Share by Revenue

The Airline Industry The Company Marketing Outlook Valuation

jetBlue offers a distinctive flying experience

8The Airline Industry The Company Marketing Outlook Valuation

jetBlue’s profits trend upwards

9

2005 2006 2007 2008 20090%1%2%3%4%5%6%7%8%9%

$(100.00) $(80.00) $(60.00) $(40.00) $(20.00) $- $20.00 $40.00 $60.00 $80.00

jetBlue Net Income and Operating Margins

Operating Margin Net Income

The Airline Industry The Company Marketing Outlook Valuation

jetBlue’s margins outperformed the industry in 2009

10

Delta United Southwest jetBlue-2%

0%

2%

4%

6%

8%

10%

Operating Margins

The Airline Industry The Company Marketing Outlook Valuation

jetBlue is in a strong cash position today

11The Airline Industry The Company Marketing Outlook Valuation

2005 2006 2007 2008 2009-100

0

100

200

300

400

500

600

700

800

Debt Acquired Cash Acquired

Capturing business travelers is essential to jetBlue’s growth

13The Airline Industry The Company Marketing Outlook Valuation

jetBlue relies on social media as part of its innovative marketing strategy

14The Airline Industry The Company Marketing Outlook Valuation

As competition increases among low cost carriers, jetBlue will lose its competitive advantage

2002 jetBlue

Southwest Virgin America Frontier AirTran

Low Fares

Satellite TV

Leg Room

Free Snacks

No Bag Fees

Premium Music

Wi-Fi

Ambience Lighting

16The Airline Industry The Company Marketing Outlook Valuation

jetBlue may lose some of its competitive advantage, but will benefit from strong brand loyalty

2010 jetBlue Southwest Virgin America Frontier AirTran

Low Fares

Satellite TV

Leg Room

Free Snacks

No Bag Fees

Premium Music

Wi-Fi

Ambience Lighting

17The Airline Industry The Company Marketing Outlook Valuation

jetBlue is well positioned for future growth, but faces risks

Fuel hedging High utilization rate Low operating costs Brand loyalty Delivery of new planes

High level of debt Unionization of labor Industry consolidation Substitutes to air travel

The Airline Industry The Company Marketing Outlook Valuation

18

Influences on growth:

Potential risks:

We recommend buying jetBlue Airways

jetBlue’s revenue growth depends on the size of its fleet

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200

50

100

150

200

250

300

350

Number of Planes

20The Airline Industry The Company Marketing Outlook Valuation

jetBlue’s operating margin averages around 6%

21

2005 2006 2007 2008 20090%

1%

2%

3%

4%

5%

6%

7%

8%

9%

jetBlue Operating Margin

The Airline Industry The Company Marketing Outlook Valuation

After accounting for fuel and other operating costs jetBlue averages about 6% operating margins

22The Airline Industry The Company Marketing Outlook Valuation

2005 2006 2007 2008 20090%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Total Revenue

Salaries

Fuel Costs

Discounting our future cash flows to present value we get a share price of $6.68

23The Airline Industry The Company Marketing Outlook Valuation

P/E Future P/ERecommendation PEG Ratio

JetBlue 34.23 10.89 2.1 2.22

Southwest 43.28 13.77 2.3 0.97

Delta 400.33 5.67 1.9 2.59

American N/A 8.99 2.3 -1.8824

jetBlue is overvalued by 2.4%

• The current market price for jetBlue is $6.84, our valuation prices the company at $6.68

• jetBlue’s performance to date has been driven by offering innovative amenities and lower fares for consumers

• Strong trend towards increasing operating margins and efficiency

• In the long term jetBlue will lose its competitive advantage, but will maintain market share through brand loyalty

• jetBlue’s creative marketing strategy will help maintain strong revenue growth

25

Price of jet fuel is projected to continue rising, as the economy grows and demand increases

26

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

$-

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

Projected future price of jet fuel

Source: US Energy Information Administration