What moved the stock
JetBlue's slide to an all time low came one day before it is set to post third quarter numbers, with markets on edge after lenders convened with restructuring specialists on Oct. 23. The selloff followed a rough week for airlines, as peers cut outlooks and flagged a longer drag from higher fuel.
Creditors get organized
Investors owning about $2 billion in notes maturing in 2031 plus a $742 million first lien loan have been collaborating with PJT Partners and Akin Gump Strauss Hauer & Feld. That outreach picked up after airline debt and equity hit fresh lows and as investors in distressed credit stepped up attention following the bankruptcy filed by Spirit Aviation Holdings Inc., a budget airline.
United Airlines' latest results underscored the squeeze from jet fuel on industry profits. United's Chief Executive Officer Scott Kirby said some carriers could face greater strain after Spirit's collapse, without identifying any by name.
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The balance sheet and the cash question
JetBlue is rated below investment grade and is carrying around $9 billion of debt while facing higher costs and heavy competition. If fuel stays elevated, the airline may need to pivot from burning cash to consistently generating it, according to Bloomberg Intelligence analyst George Ferguson.
Wall Street will zero in on third quarter free cash flow after second quarter outflows totaled $389 million, with $155 million tied to operations and $234 million devoted to capital expenditures. The bottom line: that cash flow print is the marker both shareholders and creditors are watching.
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