Updated Version 3 - JetBlue Airways Shares Jump After Pointing Out a “Disconnect” Between Performance and the Bond Market’s Plunge

The full text includes additional details from the analyst conference call and adds comments from JetBlue's president in paragraph 10

Doyinsola Oladipo/Nandan Mandayam

Reuters, October 27 - Shares of JetBlue Airways (JBLU.O) soared 20% on Tuesday, after the company raised its revenue forecasts and defended its financial position in the wake of a recent plunge in bond prices.

Previously, it was reported that, amidst a bond sell-off, creditors were working with restructuring advisors, causing JetBlue's stock to drop 10%. The airline then moved up the release of its Q3 earnings report by a day to Monday. The current short interest on the stock is 25%.

"I think there's a significant disconnect between bond market expectations and our financial performance," JetBlue CEO Joanna Geraghty told analysts on Tuesday, adding that despite fuel price volatility, the company still has ample liquidity buffers sufficient to achieve its goal of $1 earnings per share by 2028.

According to London Stock Exchange Group (LSEG) data, JetBlue's “TrueBlue” senior secured notes—a type of bond backed by the airline’s loyalty program—faced heavy selling pressure this month, with prices halving to around $47 as of October 26, and yields surging to over 30%, indicating distress levels.

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The New York-based airline said that in the second half of 2026, as airlines across the board raise fares to offset jet fuel costs driven up by the Iran war, JetBlue leads the industry in revenue growth.

On Monday, the airline raised its full-year seat revenue growth forecast from 10%-12.5% to 13.5%-14.5%, citing strong fares, resilient demand, and growth in the Fort Lauderdale market, with 93% of its seat fares already increased.

JetBlue stated that although it has not reported an annual profit since 2019, its year-over-year seat revenue has improved for four consecutive quarters.

Additionally, the airline ended this quarter with $2.2 billion in liquidity, which includes $600 million in unused credit lines and about $7 billion in unencumbered assets—according to the latest valuation, $2.8 billion of this is aircraft and engines.

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The airline said its financing plan, combined with existing liquidity, provides it with the “flexibility and buffer” to handle prolonged high fuel prices.

JetBlue President Marty St. George said on the call that even if jet fuel prices remain above $4 per gallon, the company can still achieve positive profit margins next year. He added that the airline is confident in fully recouping the extra fuel costs by early 2027.

Pressure from fuel costs, combined with disruptions earlier this year from weather and air traffic control issues, has erased about 48% from JetBlue’s share price, cutting its market value to around $890 million and making it the worst-performing US airline.

“Ample liquidity and $2.8 billion in aircraft assets might provide some room for growth, but ultimately, profitability will depend on fuel costs,” said TD Cowen analysts.

JetBlue’s Q3 jet fuel price was $3.91 per gallon, up 57% year-over-year—a jump far exceeding the 18.4% increase in unit revenue, highlighting that even with fare increases, margin pressure remains high.

(For the convenience of non-English speakers, Reuters has automatically translated its report into several other languages. Since automatic translations may have errors or lack necessary context, Reuters does not guarantee the accuracy of the automated translation and provides it solely for reader convenience. Reuters is not liable for any damage or loss arising from the use of the automatic translation feature.)