JetBlue Bonds Crash as Fuel Costs Skyrocket and Creditors Seek Legal Help

Bond prices are crashing. JetBlue’s senior creditors just brought in the heavy hitters. According to The Wall Street Journal, a group of these lenders has hired PJT Partners and the law firm Akin. They want financial and legal advice. It is a move that signals deep concern, though not necessarily an immediate collapse.

The numbers tell a grim story. JetBlue’s roughly $2 billion in senior secured notes due in 2031 dropped to about 42 cents on the dollar Thursday. By Friday, they had clawed back to the mid-40s. Just last month, those same bonds were trading near 80 cents. Bloomberg reports this creditor group holds both the $2 billion in bonds and a $742 million secured loan.

Fuel is the killer. Aircraft fuel expenses jumped 80.7% year over year to $911 million. The average price per gallon hit $4.23, up from $2.40. Higher jet fuel prices linked to the Iran war are squeezing profit margins across the U.S. airline industry. JetBlue is no exception.

The damage shows up in the books. The airline posted a net loss of $247 million in the second quarter. That is a steep climb from the $74 million loss recorded a year earlier. Revenue rose 14.5% to $2.7 billion. But operating expenses climbed 20.8%. Shares have fallen roughly 58% since the beginning of August.

JetBlue carries a heavy load. The company is managing approximately $8.5 billion in debt and finance lease obligations, according to its second-quarter SEC filing. CEO Joanna Geraghty told employees in April that bankruptcy was not on the table for 2026. She cited ample liquidity and access to capital in an internal memo reviewed by Reuters.

Still, the pressure is mounting. In September, JetBlue raised its third-quarter fuel price estimate to $3.96 per gallon from $3.49. It also bumped up projected nonfuel operating costs. The airline did raise its revenue outlook, pointing to strong travel demand and favorable pricing.

To shore up its finances, JetBlue secured a $500 million aircraft-backed financing agreement in April. As of June 30, the company reported about $2.2 billion in unrestricted cash, cash equivalents, and investment securities. It also has a $600 million undrawn credit facility.

The JetForward turnaround strategy continues. Management claimed in July that it generated $470 million in cumulative incremental earnings before interest and taxes through June. A JetBlue representative told the Journal the airline remains focused on strengthening revenue and building a more profitable business.

Investors get their next look soon. JetBlue is scheduled to report third-quarter earnings on Tuesday, Oct. 27. PJT Partners declined to comment. FOX Business reached out to JetBlue and Akin.