Today, the battle
between Virgin America and JetBlue trendy-friendly airlines intensifies.
Virgin America (not
Virgin Atlantic, VS ) celebrates its IPO on the NASDAQ this morning with the symbol
VA. As of the first morning trading, VA, backed by Richard Branson, has
raised about $307m in its initial public offering priced at $23 a share. As of
10:30 am EST price has risen 27% to around $29.
After many years of recession
and now invigorated US economy, air travel is increasing and so is the battle
for meeting millenial and boomer business between Virgin America and JetBlue.
As a comparison, in
April 2002, the JetBlue IPO opened and soared. According to CNN “it jumped 67%
in its first day of trading making is the hottest public offering in nearly a
year (2001-2002)” . JetBlue's shares flew past their opening price of $27,
rising 67% to $45.00 in one day back in 2002.
A lot has happened
since then and the trendy-friendly airlines are very popular with fliers in
2014.In informal airport interviews, both Virgins (America
and Atlantic,VS, and Jetblue have outstanding
customer satisfaction ratings.
Now Virgin America
is in a better financial position to challenge JetBlue which has just expanded
its terminal at JFK Terminal 5 to accommodate both domestic and international travelers.
Virgin America and its cousin Virgin Atlantic ( which partners with Delta
Londons flights) operate out of Terminal 4.
Both enjoy growing
customer loyalty, travel from JFK
Airport, younger staff,
amenities and perceived customer value. The slight edge of amenities goes to
JetBlue with its new “Mint” service to the Coasts with excellent meals, Direct
TV and almost fully reclining seats for a price less than half of legacy airlines.
So, with a larger
war chest, and strong customer appeal how will this battle between a fledgling public
company versus and established public company develop?
Good luck to both!
More on today’s
opening and analysis
Richard Branson,
through VX Holdings, will own a 24.8% stake in the airline post the offering.
Hedge fund Cyrus Capital Partners is the biggest shareholder with a 32.8%
stake.
Twitter @jfknewsandviews
