According to reports, a group of senior creditors for JetBlue Airways has engaged financial and legal advisors as the airline grapples with significant financial challenges, including declining bond prices and higher fuel costs that complicate its recovery efforts.
The creditors are collaborating with investment bank PJT Partners and law firm Akin, as noted by sources cited by The Wall Street Journal.
Recently, JetBlue’s approximately $2 billion in senior secured notes due in 2031 dipped to about 42 cents on the dollar, though they slightly rebounded to the mid-40-cent range by Friday. Last month, these bonds were trading closer to 80 cents.
Bloomberg also reported that the group involves holders of both the $2 billion in bonds and a secured loan of $742 million.
Meanwhile, these developments arrive as JetBlue struggles to regain profitability while managing around $8.5 billion in debt and finance lease obligations, based on its second-quarter filing with the Securities and Exchange Commission. Furthermore, the airline’s stock has fallen roughly 58% since early August, as reported by the Journal.
It’s worth mentioning that while creditors often bring in advisors when a borrower is facing financial issues, this does not always imply that bankruptcy or a debt restructuring is immediately on the horizon.
In the second quarter, JetBlue reported a net loss of $247 million, which was significantly worse compared to a $74 million loss the same time the previous year. While revenue grew by 14.5% to $2.7 billion, operating costs surged by 20.8%, primarily due to rising fuel expenses.
Fuel costs ballooned by 80.7% year over year, reaching $911 million, with the average price per gallon climbing to $4.23 from $2.40. The increase in jet fuel prices, attributed to the ongoing conflict in Iran, has been stressing airlines nationwide, affecting profit margins even as travel demand remains robust and airfares rise.
In September, JetBlue raised its estimated third-quarter fuel price to $3.96 per gallon, up from $3.49, while also adjusting its projections for non-fuel operating expenses. However, it did increase its revenue outlook, citing strong travel demand and a favorable pricing environment.
JetBlue has been working to stabilize its finances, having secured a $500 million aircraft-backed financing agreement in April. As of June 30, the airline reported approximately $2.2 billion in unrestricted cash and investments, along with a $600 million credit facility that remains undrawn.
During an internal memo shared with employees in April, JetBlue’s CEO Joanna Geraghty stated that the airline was not contemplating bankruptcy in 2026 and reassured that the company had sufficient liquidity and access to additional capital.
Additionally, JetBlue is continuing its JetForward turnaround strategy, which management claimed had generated $470 million in cumulative incremental earnings before interest and taxes as of June.
A JetBlue representative informed the Journal that the airline remains committed to enhancing revenue and creating a more profitable business model.
Investors will be looking ahead, as JetBlue is set to report its third-quarter earnings on Tuesday, October 27, potentially shedding more light on its financial situation and recovery efforts.
PJT Partners chose not to comment, and FOX Business has reached out to JetBlue and Akin for further statements.
