JetBlue Shares Rebound Over 11 Percent as Wider Loss Meets 2027 Profit Pledge

JetBlue Airways shares rose more than 11 percent in premarket trade on Tuesday, October 27, after the carrier moved to calm concerns about its financial position despite a wider than expected quarterly loss, Reuters reported. The rebound followed a slide last week on a report that creditors were working with restructuring advisers amid a bond selloff. JetBlue shares had closed on Monday at $2.37, down more than 20 percent over the past week, and Reuters said fuel headwinds and earlier weather and air traffic control disruptions have wiped away roughly 48 percent of the share value this year, dropping the valuation to $894.23 million and making JetBlue the worst performing US carrier.

JetBlue released its third quarter results after the close on Monday, October 26, a day earlier than scheduled. The net loss widened to $257 million from $143 million a year earlier, and the diluted loss per share rose to $0.68 from $0.39. On an adjusted basis the loss was $0.60 a share, wider than the $0.55 loss analysts expected. Revenue rose 21.1 percent to $2.812 billion from $2.322 billion a year earlier, while operating expenses rose 22.1 percent to $2.956 billion and the operating loss reached $144 million, compared with $100 million a year earlier.

Fuel costs drive the loss

Fuel did much of the damage. JetBlue paid an average of $3.91 a gallon in the third quarter, up 57 percent from a year earlier, and its fuel expense rose 61 percent to $868 million. The airline expects fuel to average $4.64 a gallon in the fourth quarter. Pricing partly offset the pressure. Unit revenue rose 18.4 percent, the average fare rose 19.2 percent to $245.11, and capacity grew 2.3 percent, while the load factor fell 1.5 percentage points to 83.6 percent. Chief Executive Joanna Geraghty said resilient demand and strong yields drove revenue well ahead of initial expectations, allowing the airline to recapture more of the increase in fuel costs than it first expected, and she said that momentum has carried into the fourth quarter.

Guidance moves in both directions

The carrier raised its full year seat revenue growth forecast to 13.5 percent to 14.5 percent, from 10 percent to 12.5 percent, banking on strong fares and growth in Fort Lauderdale, Reuters reported. At Fort Lauderdale, unit revenue rose nearly 15 percent in the quarter even as capacity grew more than 65 percent,. At the same time, JetBlue cut its full year adjusted operating margin forecast to negative 4.5 percent to negative 6.5 percent, from negative 2 percent to negative 5 percent, and flagged fuel costs as a drag.

JetBlue ended the quarter with $2.2 billion in liquidity, including a $600 million undrawn credit facility, and about $7 billion in unencumbered assets, of which $2.8 billion are aircraft and engines after updated appraisals. Analysts at TD Cowen said liquidity and the $2.8 billion of aircraft assets could provide runway, but the path to profitability hinges on fuel. Its TrueBlue senior secured note came under heavy selling pressure this month, its price halving to about $47 with yields above 30 percent. JetBlue said it remains on track to reach sustained operating profitability in 2027 under its JetForward plan, and to deliver at least $1 in earnings per share and positive free cash flow by 2028. Executives were scheduled to hold an earnings call at 10 a.m. Eastern on Tuesday.