JetBlue Bonds Fall to 40 Cents as Creditors With $2.7 Billion Line Up
Key Facts
JetBlue shares fell nearly 10% on October 22, closing at $2.65, their lowest closing level since the company went public in 2002, according to Bloomberg. The decline coincided with a drop in $2 billion of bonds due in 2031 to about 40 cents on the dollar, a record low, according to Trace data cited by Bloomberg. The moves highlight mounting pressure on the U.S. airline in credit and equity markets. At the same time, creditors are working with financial and legal advisers, ahead of the company’s quarterly results. Bond pricing at this level does not mean JetBlue has defaulted or decided to seek bankruptcy protection.
The creditor group includes holders of the $2 billion of 2031 bonds and lenders on a $742 million first-lien secured loan, and is working with PJT Partners and law firm Akin Gump Strauss Hauer & Feld, according to Bloomberg. The arrangement brings together bondholder claims and a secured loan, while securities linked to the company fell to record lows in the week before its third-quarter results, the report said. The source did not say that the company itself had hired these firms or that creditors had reached a restructuring agreement. Trading prices alone also do not establish that a default has occurred, but they reflect the pressure investors are pricing into the airline’s debt. The moves come as the company’s published results point to widening losses and increased use of operating cash.
In the six months ended June 30, 2026, JetBlue’s net loss was $566 million, compared with $282 million in the same period a year earlier, according to its quarterly report. The company used $35 million in cash in its operating activities in the first half, compared with $1 million in the first half of 2025, attributing the increase to higher operating losses related to fuel, wages and other expenses. In the second quarter alone, it posted an operating loss of $141 million, after recording operating income of $6 million in the same quarter of 2025. The company said the higher operating loss resulted from increased expenses, particularly fuel prices. The figures underscore pressure on profitability even as operating revenue rose in the quarter.
Operating revenue increased 14.5% year over year to $2.7 billion in the second quarter of 2026, but operating expenses rose faster, by 20.8%, to $2.8 billion, according to the company’s filing. JetBlue said demand remained resilient across its network during the quarter and that fares rose across its network and the industry. Across the industry, Reuters reported that higher jet fuel expenses linked to the Iran war pressured U.S. airlines’ margins despite higher fares and steady travel demand. That puts revenue growth up against rising operating costs, a dynamic reflected in JetBlue’s operating loss for the quarter. It also refocuses investors on the company’s ability to manage fuel and wage expenses as its losses mount.
Company data as of June 30 showed $2.2 billion in cash, cash equivalents and unrestricted investments, along with an undrawn $600 million credit facility. JetBlue said it believes these resources are sufficient to meet its liquidity needs for at least 12 months from the report date. In the same filing, cash and cash equivalents totaled $1.66 billion, compared with $8.5 billion in debt and finance lease obligations. The company also reported that about 67% of the book value of its owned property, equipment and intangible assets was pledged or committed to be pledged as collateral for loans. These figures provide context for assessing liquidity and collateral alongside the bond decline, but do not on their own mean the company is unable to meet its obligations.
Some collateral for the 2031 bonds is linked to the company’s loyalty programs, according to Bloomberg. The bonds fell to 72 cents on the dollar on October 8, their lowest level since they were issued in August 2024. Their yield spread over the benchmark also exceeded 1,000 basis points during the month before that report. By October 22, the bonds had reached a lower level of about 40 cents on the dollar, according to Trace data cited by Bloomberg. The price sequence shows a deterioration in the bonds’ valuation during October, as shares also fell to record lows.
JetBlue said it is confident in its JetForward strategy and the progress made toward restoring sustainable profitability, according to Reuters. The company is scheduled to hold a call on its third-quarter 2026 results on Tuesday, October 27, at 10:00 a.m. Eastern time, according to its investor relations website. The call will follow declines in the stock and bonds and creditors’ engagement with advisers, amid fuel cost pressures that have affected industry results. The upcoming quarterly results will provide the latest data on the company’s financial performance. The event will also give management an opportunity to present its view of the strategy and path back to profitability.