JetBlue shares rally as airline seeks to calm financial concerns

JetBlue Airways shares rose over 11% in premarket ​trade on Tuesday, after the carrier ​tried to soothe concerns related to ‌its financial ​position despite a wider-than-expected quarterly loss. The quarter was weighed down by surging fuel prices tied to the ongoing war in Iran, ‌which has forced the industry to take drastic measures such as raising fares, cutting capacity or taking on more debt.

The fuel headwinds, along with weather and air traffic control disruptions earlier this year, ‌have wiped away roughly 48% of JetBlue's share value, dropping its valuation to $894.23 million and ‌making it the worst-performing US carrier. Still, JetBlue ended the third quarter with $2.2 billion in liquidity, including a $600 million undrawn credit facility, and about $7 billion in unencumbered assets — $2.8 billion of which are aircraft and engines, following updated appraisals.

The ⁠carrier also ​raised its full-year ⁠seat revenue growth forecast to 13.5%-14.5% from 10%-12.5%, banking on strong fares and growth in Fort Lauderdale, but flagged ⁠fuel costs as a drag. "Liquidity and $2.8 billion of aircraft assets could provide runway, but the path to ​profitability hinges on fuel," analysts at TD Cowen said.

Fuel costs surged for JetBlue in ⁠the third quarter, with the airline paying $3.91 per gallon, up 57% from a year earlier. By comparison, unit revenue increased ⁠18.4%, ​highlighting the pressure rising fuel expenses continue to place on margins despite stronger pricing.

Tuesday's rebound marks a turnaround from last week, when JetBlue's shares took a beating on a ⁠report that the airline's creditors were working with restructuring advisers amid a bond selloff. JetBlue's TrueBlue senior secured ⁠note, a bond ⁠backed by the airline's loyalty program, came under heavy selling pressure this month, with the price halving to about $47 and yields surging to distressed levels ‌above 30%.