- JetBlue says it has $2.2 billion in liquidity and $2.8 billion in aircraft and engine assets
- Airline recovers 87% of higher fuel costs, but quarterly losses widen
- Expects fourth-quarter operating margin to improve despite elevated fuel prices
(Reuters) - JetBlue Airways sought to reassure investors about its financial health on Monday despite posting a bigger-than-expected quarterly loss, as a sharp selloff in its bonds and mounting restructuring concerns cast a shadow over the airline's turnaround.
JetBlue's shares jumped 11% in volatile trading after the bell, recovering some losses after they closed down nearly 10% following a report that the airline's creditors were working with restructuring advisers amid a bond selloff.
Even as management insists its liquidity is sufficient to satisfy the company's needs for at least the next 12 months, shares have fallen 48% year to date, while short interest in the stock is now at 26%.
JetBlue's TrueBlue senior secured note, a bond backed by the airline's loyalty program, came under heavy selling pressure this month, with the price halving to about $47 and yields surging to distressed levels above 30%.
The carrier raised its full-year forecast for seat revenue growth to 13.5% to 14.5%, from its earlier range of 10% to 12.5%. It attributed the improved outlook to higher fares and its expansion in Fort Lauderdale, but acknowledged ongoing challenges from surging fuel costs and operating losses.
JetBlue said it was able to recover 87% of its fuel costs in the third quarter as fares rose across the industry with no meaningful decline in passenger volume.
US airlines have relied on fare hikes, ancillary fees and capacity controls to boost revenue, as they grapple with volatile fuel prices that make it harder to forecast costs and earnings.
JetBlue said it paid about $3.91 per gallon of fuel in the July-September quarter, up 57% from a year ago, and slightly below the $3.96-a-gallon rate it had forecast last month. Unit revenue, a measure of pricing power, rose just 18.4%, lagging the spike in fuel costs.
The airline posted an adjusted loss of 60 cents per share for the three months to September 30, compared with a 40-cent loss in the year-ago period. Analysts expected a loss of 55 cents per share, according to data compiled by LSEG.
CASH WOES
JetBlue ended the third quarter with $2.2 billion in liquidity, including a $600 million undrawn credit facility, and about $7 billion in unencumbered assets — $2.8 billion of which are aircraft and engines, following updated appraisals.
However, cash and cash equivalents fell to $1.26 billion from $1.66 billion at mid-year, and total cash and investments have dropped by about $850 million, or a third, since December.
Total debt declined to $8.39 billion from $8.5 billion in the prior quarter, but the company continues to burn cash at an accelerating pace.
JetBlue used $273 million more cash than it generated from operations in the first nine months of 2026 — nearly twice the $143 million cash burn in the same period last year. This shrinking cushion leaves the airline with less room to maneuver as it faces ongoing losses and upcoming debt maturities, increasing pressure to raise additional funds if the trend continues.
Still, the airline reiterated its target of at least $1 in earnings per share and positive free cash flow in 2028.
It expects operating margin to further improve in the fourth quarter, even with the price of fuel being 85% higher year over year.
Reporting by Nandan Mandayam in Bengaluru and Doyinsola Oladipo in New York and Rajesh Kumar Singh in Chicago; Editing by Devika Syamnath and Diti Pujara
Source: Reuters