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JetBlue rating affirmed by Fitch

Fitch Ratings has affirmed the Long-Term Issuer-Default Rating (IDR) for JetBlue Airways Corp. (JBLU) at ‘BB-‘. The Rating Outlook has been revised to Positive from Stable. Fitch has also affirmed JBLU’s senior secured credit facility at ‘BB+/RR1’. Fitch has withdrawn the company’s unsecured rating following the conversion of all of its outstanding convertible notes in 2016.

The rating encompasses JBLU’s strong credit metrics, consistent profitability, growing domestic presence and its solid financial flexibility. The rating is also supported by the company’s meaningful debt reduction over the past few years and its continued commitment to a healthy balance sheet.

JBLU’s Positive Outlook reflects credit metrics that are in-line with or stronger than other airlines rated in the ‘BB’ category. Fitch may upgrade the rating within the next year should the company maintain its financial performance and credit metrics in the face of moderately higher fuel prices, the current competitive environment, or in the case of an economic downturn.

Fitch’s primary ratings concerns revolve around JBLU’s growth strategy which is more aggressive than its peer group, and requires heavy spending on aircraft deliveries over the next few years. The increased aircraft related capex is a critical part of JBLU’s capacity plans but it will put pressure on FCF over the intermediate term and will most likely lead to incremental borrowing. These risks are offset by the company’s sizable liquidity balance and its successful track record of growth. Fitch will also monitor JBLU’s recent increased focus on returning cash to shareholders but, at this time, considers it a minimal concern due to the strength of the company’s balance sheet. Longer-term concerns also include the strengthened competitive position coming from the major network carriers as their financial performance has improved and the rapid growth of ultra-low cost competitors. Other risks include cyclicality and the high degree of operating leverage that is typical for the airline industry

Date: March 3, 2017

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