JetBlue is one of the most troubled airlines in the United States. They haven’t made money in six years. Their ability to turn themselves around was an open question even before oil prices shot up.
The airline’s founder Dave Neeleman said he didn’t believe anyone would buy them because of their $9 billion debt and suggested that the carrier could enter bankruptcy this year. Their CEO says that’s not something they are considering – this year.
On Thursday, though, the airline “invited fixed income investors to a meeting focused on the company’s liquidity and balance sheet in August.” They haven’t told those investors what the meeting is about.
The security involved is JetBlue’s 9.875% senior secured notes backed by its TrueBlue frequent flyer program with a face value of $2 billion, paying 9.875%. These bonds fell by more than two points on the news to 84 cents on the dollar, which is their lowest price since they were issued in August 2024.
For JetBlue’s part they say simply that they ‘routinely meet with investors to discuss strategy and performance.’ But the airline’s credit rating is already junk at CCC+ (because the TrueBlue notes are backed by the loyalty program, these are rated B) and the meeting adds uncertainty.
At a price of 84, the bonds have a market value of about $1.68 billion, yield of 11.8% and yield to maturity of 14.3%. JetBlue pays $197.5 million in annual coupon interest on these notes alone.
JetBlue has to provide an annual appraisal of TrueBlue within 30 days after the end of the second quarter. So this meeting would follow that valuation, which is used to measure compliance with bond covenants (and whether they’re in default). It’s most likely a meeting just to reassure investors, but in the absence of information it spooked them.
TrueBlue bondholders have strong collateral as long as the carrier continues operating, even if they were to enter bankruptcy reorganization. And JetBlue still has cash and their debt cliff doesn’t come until 2029. There’s round half a billion dollars a year in debt due during the remainder of this year and each of the next two years before $1.8 billion must be paid or refinanced.
Bizarrely, JetBlue is retreating from New York, closing bases, even as it buys more slots at New York LaGuardia out of the Spirit Airlines bankruptcy estate.
Dave Neeleman? You mean, “Mormon” Dave Neeleman? (@L737, a good mornin’ call-back.)
Jet Blue was a good airline until Wall Street Favorite Robin Hayes took it over and proceeded to destroy it.
@Steve — Eh, it’s mixed; Hayes deserves respect for Mint (still one of jetBlue’s greatest strengths), but wasted years chasing NEA and Spirit, instead of focusing on operational reliability and resiliency.
To me, it seems pretty ‘shameful’ how he appears to have used a ‘health scare’ as an excuse when leaving JBLU in 2024; only months later to recover and become CEO of Airbus Americas… “excited and energized.” Huh. Turns out, he just needed a few months to rest.
Reminds me of how GM’s CEO was forced out in 2009, and Mary Barra was eventually installed as the first woman CEO of a Big-3 automaker to ‘clean up’ the boys’ messes. Anyway, good luck, Joanna!
My guess – a prepackaged debt restructuring. Then United steps in.
@mike — Ya know, I think that’s the play. As long as Kirby keeps ‘kissing the ring’ (and calling PBI, DJT, and calling the Gulf of Mexico, the Gulf of America, etc., golden idols, etc.) anything is possible. It’s certainly not 2024 anymore; the DOJ is now a henchman for a mob-boss, no longer an antitrust regulator. (But, but… state AGs and the Clayton Act? Cute paper tigers.) (But, but… our independent federal judiciary? Oh please. Buy that Justice his new $500k motor coach, the other one his beer, and keep flying those flags for Martha-Ann, then watch as ‘antitrust precedent’ evaporate into thin air.) If United is going to pull off a shameless Northeast slot grab under the cover of a JetBlue prepack, they’d better do it fast before the Midterms ruin the party. (Actually, ignore that ‘noise;’ in reality, Congress has no real ‘veto,’ here, and even if they did, they have no ‘balls.’ They’ll never ‘remove’ anyone. 67/100? Yeah right….) So, actually, Kirby has until at least January 2029. Ample time. No, perfect timing, especially if JBLU financials really sink in 2027. Fire sale! (@Tim Dunn, if I were Delta, I’d start to sweat a little.)
Pump and dump
The CEO should be working on a prepackaged bankruptcy with bond holders swapping some debt for equity in a reorganized company. At that point they become more attractive for an acquisition. Both Southwest and UA have looked at B6 but taking on the debt is a non starter. There is no way FLL is ever going to be a high yield market.
@George Romey — Debt swap doesn’t fix the P&W nightmare; besides UA just wants JFK/BOS slots and gates, and WN doesn’t want Airbus, or Mint (unless Bob Jordan, sorry, I mean, Elliott Management, really does want to ‘pivot to premium,’ which they don’t because they just want a quick payday.)
Also, mostly because I enjoy disagreeing with you on here when you say silly things, FLL isn’t supposed to be high-yield; it’s volume and leisure. JetBlue ‘has the cards’ at FLL, especially after NK’s collapse. B6’s real problem was wasting years chasing the failed NEA and NK deals while ignoring ops. (Never mind, ignore all this and enjoy flying American, Mr. Concierge Key.)
Intriguing.
@1990 — c-c-c-call back! Speaking of Mormons, hoping to check out the SLC Amex Centurion later this year
@L737 — I missed it when I went through last year (and I was flying United at the time, so it would’ve been great to actually have a lounge like Amex at the time.) I need to route-through again to try both the new Centurion as well as the 2nd new SkyClub at B as well.
One way to advert a B6 bankruptcy is to join an airline alliance; Star being the preferred. Provide the domestic leg of Euro & Asian Star airlines at BOS and JFK. Would enhanse the value of B6 FF and credit card program. Those bond supporting the FF program may jump back to 90% or 95%.
As for FLL, need to leverage into a connection point for Latin America & Caribbean; similar to AA at MIA. Currently, FLL is biased toward O&D.
Curious about the additional 22 slots at LGA with the 31 already held by B6. Just relying on a Florida connection has limited rewards. Again, a Star alliance could pick up the volume of PAX at the Marine Terminal.
@Exit Row Seat — I’mm’a sucker for nostalgia, rotundas and murals, but, friends, we really should just let the LGA Marine (Terminal A) be a museum (no commercial flights there, currently). No lounges, either, though. Then again, talk about “efficiency”; if just carry-on, could show-up literally 30 minutes before departure, hardly ever lines at security, board. Impressive, actually.
1990 do you ever stfu
@Thomas — Welcome back, sir. So, DoC not doin’ it for ya, these days? Ya needed some of that good ole ‘VFTW-action.’ Or, is it that you got one of those Chase Amazon shutdown notices? Quit cyclin’… How about the $175 BofA retention offer? 0/4 for me. Darn.
@Thomas, no it never STFU! It will probably feel the need to refute this post. Prove me wrong.
Why @Gary allows it to treat his biggest asset as their personal message board is beyond irresponsible.
On to its pretense that B6 wasted time chasing a failed NEA, is not true.
The Biden administration DOJ sued to end it. It was actually quite a successful joint partnership and B6 enjoyed the fruits of it. Fares actually went down. The DOJs unwinding of the NEA hurt both AA and B6. The Biden administration was picking winners, and cucking for DL. Many great employees will lose their livelihood when B6 goes Tango Uniform.
The answer is obviously no.
@Mantis — Aww, turn that frown upside down! Would a ‘sh*t-ton of beer’ make it better for ya?
Something is very strange with Jet Blue. There is a definite Russian oligarch connection to the airline.
@Natasha — Spill the tea. Tell us more.