P/E Multiple
Using the leading P/E multiple method of valuation is standard practice in the airline industry (Yale Schoolof Management, 2002). However, in our analysis (figure 1) the comparison sample size had to be reducedto include only low-cost airlines with positiveearnings which limited the scope of the relative values. Due tothe small sample size, the average P/E ratio was skewed high towards Frontier’s outlying performance.Therefore we determined that the median P/E ratio of comparable companies provided a more accuratefigure. With predicted earnings per share in 2002of $1.20, JetBlue’s price per share would be $34.12