JetBlue Airways shares surge as the company works to ease concerns over its financial situation

Reuters, October 27 - In premarket trading on Tuesday, JetBlue Airways (JBLU.O) shares rose more than 11% after the company moved to ease concerns about its financial condition (link), despite reporting a wider-than-expected quarterly loss.

This quarter’s performance was dragged down by a surge in fuel prices triggered by ongoing conflict in Iran, forcing airlines to adopt aggressive measures such as significantly raising ticket prices, reducing capacity (link), or taking on more debt.

Pressure from fuel costs, along with disruptions caused by weather and air traffic control earlier this year, has wiped out about 48% of JetBlue Airways’ share price, reducing its market value to $894.23 million, making it the worst-performing U.S. airline.

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Nevertheless, JetBlue Airways still held $2.2 billion in liquidity at the end of the third quarter, including $600 million in unused credit lines and approximately $7 billion in unencumbered assets—based on the latest estimates, $2.8 billion of which were aircraft and engines.

The airline also raised its full-year seat revenue growth estimate from 10%-12.5% to 13.5%-14.5%, mainly thanks to strong ticket prices and growth in Fort Lauderdale routes, though it noted that fuel costs would remain a drag.

"Liquidity and $2.8 billion in aircraft assets may provide room for maneuver, but the key to profitability remains fuel costs," said analysts at TD Cowen.

JetBlue Airways' fuel costs surged in the third quarter, with the airline paying $3.91 per gallon, up 57% from the same period last year.

In comparison, unit revenue grew 18.4%, underscoring that despite strong ticket prices, steadily rising fuel costs continue to pressure margins.

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Tuesday's rebound marks a reversal from last week's trend—when reports that JetBlue Airways’ bondholders were working with restructuring advisers during a bond sell-off led to a sharp drop in its share price.

JetBlue Airways' “TrueBlue” senior secured notes—a bond backed by the airline’s loyalty program—faced heavy selling pressure this month, with prices halved to around $47 and yields soaring to over 30%, a distress level.

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