JetBlue's loss widens to $257mn as creditors hire advisers

JetBlue Airways reported a third quarter net loss of $257mn on October 26, wider than the $143mn it lost a year earlier, even as revenue rose 21.1 per cent to $2.8bn and the airline recovered about 87 per cent of its higher fuel bill through fares. The results came three days after the Wall Street Journal reported that a group of senior creditors had hired the restructuring adviser PJT Partners.

Fuel explains the gap between revenue and profit, with JetBlue paying an average of $3.91 a gallon, 57 per cent more than a year earlier, which pushed unit costs up 19.4 per cent. Excluding fuel and special items, unit costs rose 7 per cent, while revenue per available seat mile rose 18.4 per cent and the adjusted operating margin improved slightly to minus 3.9 per cent from minus 4.1 per cent.

The adjusted loss of $0.60 a share was slightly wider than analysts expected, although the shares rose about 20 per cent after the results, having hit a record low earlier in the week. Chief executive Joanna Geraghty said "resilient demand and strong yields drove revenue well ahead of our initial expectations."

JetBlue's outlook is stronger than the quarter it has just reported, with fourth quarter unit revenue expected to rise 18–22 per cent and the adjusted operating margin to improve by one to two points year on year, despite fuel forecast at about $4.64 a gallon, roughly 85 per cent higher than a year earlier, with unit costs excluding fuel flat.

Fort Lauderdale is the strongest part of the network, where unit revenue rose nearly 15 per cent on capacity more than 65 per cent higher, and JetBlue expects its seat share at the airport to reach about 37 per cent in the fourth quarter. Capacity elsewhere is flat to down, as the JetForward turnaround plan cuts loss-making routes and adds premium products.

JetBlue says that plan will add at least $310mn to operating earnings this year compared with 2024, and $850mn–$950mn a year by 2027. It still expects an adjusted operating margin of minus 4.5 to minus 6.5 per cent for 2026, and is targeting sustained operating profit in 2027, earnings of at least $1 a share and positive free cash flow in 2028.

The creditors' concern is how long that plan will take, given that JetBlue had $8.5bn of debt and finance lease obligations at June 30 and liquidity of $2.2bn at the end of the third quarter, including a $600mn undrawn credit facility. About $2bn of bonds backed by its TrueBlue loyalty programme fell to 42 cents on the dollar this month.

The maturity schedule gives JetBlue some room, with $236mn of principal due in the rest of 2026, $478mn in 2027 and $582mn in 2028, before $1.8bn falls due in 2029. JetBlue said it "remains confident in its JetForward strategy", and the question for creditors is whether fuel prices allow that strategy to reach profit before the larger repayments arrive.

What to watch: whether the fourth quarter margin improvement materialises at fuel near $4.64 a gallon, any approach to creditors on the loyalty-backed debt, and the 2027 capacity plan when JetBlue reports in January.