JetBlue aims to refi 2026 debt, pay down more debt; liquidity is good

By Devika Patel

Knoxville, Tenn., April 23 – JetBlue Airways Corp. plans to refinance some low-coupon convertible debt that is coming due in 2026, but wants to do so closer to maturity since this debt carries the most favorable interest rate of all of the New York-based airline’s debt, management said Tuesday.

Executives then plan to focus on returning the company to profitability so that it can generate free cash flow, which will be used to begin paying down higher coupon debt, which is a top priority for management.

“The next significant debt maturity that we’ll face [is the convertible debt due in 2026],” chief financial officer Ursula Hurley said on the airline’s first quarter ended March 31 earnings conference call on Tuesday.

“We do intend to refinance that.

“It’s quite early at this point, but the team is exploring opportunities to refinance that.

“Again, we’ve got a significant amount of unencumbered collateral and we can target specific markets just through the lens of raising the most cost-effective money.

“The convertible debt is the most friendly in terms of rate that we have in the capital structure, so in terms of financing we’ll do that as close to the maturity as possible and we’ve got to get the business back to profitability, so that we’re actually generating free cash flow, so that we can then pivot to actually start paying down debt.

“That is the goal that we’re focused on,” she said.

The company ended the first quarter with $1.7 billion in unrestricted cash, cash equivalents, short-term investments and long-term marketable securities. It also has an additional $600 million of liquidity under its undrawn revolving credit facility.

“We are targeting somewhere between $1.5 billion and $1.6 billion of cash at any point in time,” Hurley said.

“We actually ended the quarter slightly on the higher end of that.

“As a reminder, we have a $600 million revolving credit facility so, between cash on hand and the revolver, we think that that’s a healthy balance and, also, as a reminder, we’ve got a healthy, unencumbered asset base as well that we can utilize at any point to raise funding when necessary,” she said.

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