Updated Version 4 - JetBlue Airways Shares Surge After Pointing Out "Disconnect" Between Performance and Bond Market Sell-off

Section 12 supplements the performance of the travel services division

Doyinsola Oladipo/Nandan Mandayam

Reuters, October 27 - Shares of JetBlue Airways (JBLU.O) surged 20% on Tuesday after the company raised its revenue outlook and defended its financial position against recent sharp declines in bond prices.

Previously, it was reported that creditors were working with restructuring advisors during a bond sell-off, causing the stock to tumble by 10%. Following this, the airline moved up its Q3 earnings release by a day to Monday. Currently, the short interest in the stock is at 25%.

"I think there’s a significant disconnect between the market expectations in the bond market and our financial performance," JetBlue CEO Joanna Geraghty told analysts on Tuesday, adding that despite volatile fuel prices, the company has enough liquidity buffers to achieve its target of $1 per share earnings by 2028.

According to data from London Stock Exchange Group (LSEG), JetBlue's “TrueBlue” senior secured notes—a type of bond backed by the airline’s loyalty program—have faced heavy selling pressure this month. As of October 26, their price had been halved to about $47, with yields soaring above 30%, reaching stressed levels.

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The New York-based airline said that in the second half of 2026, as airlines across the industry raise fares to offset jet fuel costs driven higher by the Iran war, it is leading the industry in revenue growth.

On Monday, the airline raised its full-year seat revenue growth forecast from 10%-12.5% to 13.5%-14.5%, citing strong pricing, resilient demand, and growth in the Fort Lauderdale market. The company said 93% of its seat prices have already been raised.

JetBlue said that although it has not achieved an annual profit since 2019, its seat revenue year-on-year growth has improved for four consecutive quarters.

Furthermore, the airline ended this quarter with $2.2 billion in liquidity, including $600 million in undrawn revolving credit, and about $7 billion in unencumbered assets—based on the latest assessment, $2.8 billion of which are aircraft and engines.

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The airline said that its financing plans, combined with its existing liquidity, provide “flexibility and buffer” to cope with sustained high oil prices.

The company is also relying on its Paisly business to boost operating income. President Marty St. George stated that the travel services division set a quarterly performance record and is expected to reach $100 million in operating income by 2026, with this contribution projected to double by 2028.

St. George said that even if jet fuel prices remain above $4 per gallon, JetBlue can still achieve positive profit margins next year and added that the company is confident it can fully recoup extra fuel costs by early 2027.

The pressure from fuel costs, along with weather and air traffic control disruptions earlier this year, has wiped out about 48% of JetBlue’s market value, reducing it to roughly $890 million, making it the worst-performing US airline.

"Abundant liquidity and $2.8 billion in aircraft assets may provide room for development, but the key to profitability still depends on fuel costs," analysts at TD Cowen said.

JetBlue’s fuel unit cost in Q3 was $3.91 per gallon, up 57% from a year earlier—a rise far outpacing the 18.4% increase in unit revenue, highlighting that despite ticket price hikes, margin pressure remains unresolved.

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