JetBlue Lenders Bring In PJT and Akin as Debt Crashes to Distressed Levels

JetBlue Lenders Bring In PJT and Akin as Debt Crashes to Distressed Levels

Creditors organize ahead of earnings

A group of JetBlue Airways creditors has organized with restructuring advisers ahead of the carrier's third-quarter results, according to an exclusive report in The Wall Street Journal. The group, which holds part of $2 billion in bonds due in 2031 and a $742 million first-lien loan, is working with investment bank PJT Partners and law firm Akin Gump Strauss Hauer & Feld. JetBlue, PJT and Akin did not respond to requests for comment.

Shares and bonds hit record lows

JetBlue shares fell nearly 10% on October 22 to close at $2.65, with an intraday low around $2.63, the lowest since the airline went public in 2002. The $2 billion notes due 2031, backed by collateral tied to the TrueBlue loyalty program, plunged to about 40 to 42 cents on the dollar from around 80 cents earlier in October, before steadying in the mid-40s. The first-lien loan fell 13 cents on the week to 45 cents, while the loyalty-backed bonds lost about 10 cents to roughly 45 cents.

A fuel shock the airline did not hedge

The squeeze comes from jet fuel. U.S. jet fuel prices have nearly doubled since late February and are up roughly 120% since October 2025. JetBlue, which like most large U.S. carriers does not hedge much fuel, paid an average of $4.23 a gallon in the second quarter, up 76%, with aircraft fuel costs reaching $911 million. The airline raised its third-quarter fuel-cost estimate in September. One estimate puts the added 2026 fuel burden at about $2.5 billion.

Revenue up, still deep in the red

Demand is not the problem. Second-quarter revenue rose 14.5% from a year earlier to $2.7 billion, yet JetBlue still posted a $247 million net loss, or 66 cents a share. Debt and finance-lease obligations stood at about $8.5 billion at June 30, with roughly $590 million of full-year interest expense expected. Moody's cut the carrier to Caa2 in May; S&P lowered it to CCC+ in June and projected a free-cash-flow deficit of about $1 billion for 2026. Liquidity was about $2.2 billion in unrestricted cash and investments plus a $600 million undrawn revolver; UBS estimates a $660 million cash burn in the second half, leaving about $1.6 billion at year end, above the $750 million covenant floor.

October 27 looms as the next test

JetBlue reports third-quarter results before the market opens on October 27, with consensus expecting a loss of around 53 to 55 cents a share on revenue near $2.83 billion. Management's case rests on JetForward, the turnaround plan launched in July 2024 under CEO Joanna Geraghty to cut costs and concentrate on profitable routes. Whether PJT and Akin stay precautionary hires or become the opening act of a restructuring negotiation may hinge on what the company says that morning. Short sellers are already positioned: short interest exceeds 30% of the tradeable float, and the shares are down 42% this year.