A group of senior creditors to JetBlue Airways is working with PJT Partners and law firm Akin as the airline grapples with cash burn and elevated oil prices, according to people familiar with the matter.
JetBlue's bonds traded down sharply this week following a recent bondholder call. Its $2 billion notes due 2031 fell to 42 cents on Thursday before bouncing back slightly in the mid-40s on Friday, according to market participants and the Financial Industry Regulatory Authority, or Finra. They traded near 80 cents on the dollar earlier this month, Finra data shows.
A representative for JetBlue said the company is focused on strengthening revenue and building a more profitable business. The company plans to update its progress and financial outlook during its third-quarter earnings call on Tuesday.
JetBlue Airways' stock has lost about 58% in value since the start of August.
JetBlue had amassed roughly $8.5 billion in debt and finance lease obligations as of June, according to the company. A significant portion of that debt is backed by its aircraft fleet and TrueBlue customer loyalty program.
While the airline has additional assets it could use to raise more capital, some market participants worry that taking on additional leverage could leave the carrier with limited flexibility if it fails to turn around the business. Roughly two-thirds of JetBlue's property, equipment and intangible assets are pledged as collateral, according to quarterly filings.
JetBlue last disclosed a significant financing in April, when it secured around $500 million in aircraft-backed capital fully drawn as of June 30.
The company also risks pressure from credit-card processors which can require airlines to set aside collateral if financial conditions worsen, the people said. JetBlue said it faced no such collateral requirements at the end of June.
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