Updated version 3 - Reissue - As losses deepen, JetBlue Airways seeks to reassure investors

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Reuters, October 26 - Although JetBlue Airways (JBLU.O) reported a quarterly loss that exceeded expectations, the company on Monday still sought to reassure investors of its sound financial position, after its bonds faced heavy selling and growing concerns about restructuring cast a shadow over the airline's turnaround plan.

The airline raised its forecast for full-year revenue per seat from a previous range of 10% to 12.5% up to 13.5% to 14.5%, indicating strong confidence in maintaining higher ticket prices.

After hours, JetBlue’s shares surged 11% in volatile trading. Earlier reports indicated that, as debt concerns intensified, creditors were working with restructuring advisers, pushing the stock down nearly 10% by Monday’s close. Year to date, the stock has dropped 48%, with a short interest ratio of 26%.

The airline stated that after updating its fleet and engine appraisal report, it ended the quarter with $2.2 billion in liquidity, along with $2.8 billion in unencumbered aircraft and engine assets. As of the end of the September quarter, total debt was $8.39 billion, down from nearly $8.5 billion in the previous quarter, while cash and cash equivalents fell from $1.66 billion to $1.26 billion.

However, JetBlue reaffirmed its target to achieve positive operating profit margin and $1 earnings per share by 2028, along with positive free cash flow.

The airline expects that despite an 85% year-over-year rise in fuel prices, operating profit margins in the fourth quarter will still improve by 1 to 2 percentage points.

JetBlue reported that in the third quarter it achieved an 87% fuel cost recovery rate, benefiting from a fairly robust revenue environment—with industry-wide fare increases, traveller demand showed no significant decline, and air travel demand remained stable.

So far, U.S. airlines have relied on fare hikes, checked baggage fees, and capacity controls to boost revenue, as they face the challenges of volatile fuel prices, making costs and earnings forecasts more difficult. The rise in jet fuel prices has outpaced increases in airline fares.

JetBlue stated that its average fuel cost from July to September was $3.91 per gallon, up 57% from a year earlier and slightly below last month’s forecast of $3.96 per gallon. Unit revenue, an indicator of pricing power, grew only 18.4%.

In the three months ended September 30, the airline reported an adjusted loss of 60 cents per share, widening from a 40-cent loss a year earlier. According to data compiled by London Stock Exchange Group (LSEG), analysts had previously expected a 55-cent per share loss.

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