JetBlue Airways was on track to become the leading low-fare airline in early 2002. "Despite the fact that the U.S. airline industry had seen 87 new airlines fail airlines over the last 20 years" JetBlue had an innovative business model focused on reducing costs by eliminating “everything that sucked about air travel.” JetBlue Airlines was created by David Neeleman who “launched a new airline that would bring humanity back to air travel. Neeleman had a lot of prior experience in the airline industry having spent time at Morris Air, which was later acquired by Southwest. Neeleman also used his experience to help launch a low-cost airline in Canada known as West Jet. One of JetBlue's strengths was its commitment to technology. By maintaining a fleet of newer and more technologically advanced Airbus A320s "JetBlue's fleet was not only more reliable and fuel efficient than other airline fleets, but also allowed for greater economies of scale because the airline had only one model of aircraft". significant growth in the early part of the 21st century. The airline Southwest, where Neeleman worked for a short time, was the "pioneer of low-cost air travel" and "was the fourth largest airline in the world." Several low-cost airlines were born following the success of Southwest Airlines after 9/11. As the market has grown, many of these companies have gone public seeking an IPO or initial public offering as a way to raise capital and grow the company. When it came time for JetBlue to go public, one of the main issues was the price to issue the shares. An initial public offering is the first time a company's stock is listed on a stock exchange and is a great way to grow your... ... middle of paper ...... Brigham and Daves give three reasons why a company would like to underprice its IPO. The first reason is that "the company wants to create excitement, and a price increase on day one does that." (Brigham and Daves page 637). Two other reasons for a low IPO price are that “only a small percentage of a company's shares are typically offered to the public, so current shareholders donate less due to the underpricing than appears at first glance, and IPO companies generally plan to have further offerings in the future and the best way to ensure future success is to have a successful IPO, which guarantees the price. "(Brigham and Daves page 637) Brigham and Daves make an excellent point about the poor long-term performance of IPO stocks. In general, "the offering price appears to be too low, but the first day's rise is generally too high." (Brigham and Daves pg 637)