Updated Version 2 - JetBlue Airways points out a "disconnect" between its performance and the sharp decline in the bond market, with its stock price rising afterward

Updated the entire stock price trend and rewrote the first paragraph based on the CEO's comments

Reuters October 27 - JetBlue Airways (JBLU.O) extended its early gains on Tuesday, with shares soaring 20% after the company stated there was a "meaningful disconnect" between its third quarter results and the recent bond sell-off.

The airline raised its full-year seat revenue growth forecast from 10%-12.5% to 13.5%-14.5%, mainly thanks to robust ticket pricing and growth in the Fort Lauderdale market, but also noted that fuel costs would be a drag.

Additionally, the company held $2.2 billion in liquidity at the end of this quarter, including $600 million in unused credit lines, and about $7 billion in unencumbered assets—according to the latest evaluation, $2.8 billion of which are aircraft and engines.

“I believe there is a significant disconnect between the market narrative and bond market performance and our financial results,” JetBlue CEO Joanna Geraghty told analysts, noting the company has sufficient financial flexibility to achieve its earnings per share (EPS) target for 2028.

JetBlue’s “TrueBlue” senior secured bonds (a bond backed by the airline’s loyalty program) faced heavy selling pressure this month, with prices halved to around $47 by October 26 and yields surging to distressed levels above 30%.

Fuel prices surged due to ongoing warfare in Iran, putting heavy pressure on the airline sector this quarter and forcing carriers to raise fares, cut capacity (link), or take on more debt.

The pressure of fuel costs, combined with earlier disruptions caused by weather and air traffic control this year, has wiped out about 48% of JetBlue’s share price, lowering its market capitalization to $894.23 million and making it the worst-performing U.S. airline.

https://www.reuters.com/graphics/AUTOMATED-202610/A4A-JET-FUEL-MONTHLY-5Y/gdvzgejwbpw/chart.png

“Ample liquidity and $2.8 billion of aircraft assets may offer room for maneuver, but the key to profitability lies in fuel costs,” analysts at TD Cowen said.

JetBlue’s third quarter fuel costs surged, with the airline paying $3.91 per gallon, up 57% from the same period last year.

By contrast, unit revenue rose 18.4%, highlighting that despite higher ticket prices, rising fuel expenses continue to put pressure on margin.

The stock currently has a short interest ratio of 25%.

https://www.reuters.com/graphics/JETBLUE-RESULTS/JETBLUE-RESULTS/byvradmjwpe/chart.png

(To assist non-native English speakers, Reuters has automated the translation of its report into several other languages. As automated translations may contain errors or lack desired context, Reuters does not guarantee the accuracy of automated translation texts, which are provided solely for reader convenience. Reuters assumes no responsibility for any damage or loss caused by use of automated translation features.)