JetBlue’s Frequent Flyer-Backed Bonds Hit 14% Yield After Airline Schedules Mysterious Investor Call

JetBlue is one of the most troubled airlines in the United States. They haven’t made money in six years. Their ability to turn themselves around was an open question even before oil prices shot up. The airline’s founder Dave Neeleman said he didn’t believe anyone would buy them because of their $9 billion debt and suggested that the carrier could enter bankruptcy this year. Their CEO says that’s not something they are considering – this year. On Thursday, though, the airline “invited fixed income investors to a meeting focused on the company’s liquidity and balance sheet in August.” They haven’t told those investors what the meeting is about. The security involved is JetBlue’s 9.875% senior secured notes backed by its TrueBlue frequent flyer program with a face value of $2 billion, paying 9.875%. These bonds fell by more than two points on the news to 84 cents on the dollar, which is their lowest price since they were issued in August 2024. For JetBlue’s part they say simply that they ‘routinely meet with investors to discuss strategy and performance.’ But the airline’s credit rating is already junk at CCC+ (because the TrueBlue notes are backed by the loyalty program, these are rated B) and the meeting adds uncertainty. At a price of 84, the bonds have a market value of about $1.68 billion, yield of 11.8% and yield to maturity of 14.3%. JetBlue pays $197.5 million in annual coupon interest on these notes alone. JetBlue has to provide an annual appraisal of TrueBlue within 30 days after the end of the second quarter. So this meeting would follow that valuation, which is used to measure compliance with bond covenants (and whether they’re in default). It’s most likely a meeting just to reassure investors, but in the absence of information it spooked them. TrueBlue bondholders have strong collateral as long as the carrier continues operating, even if they were to enter bankruptcy reorganization. And JetBlue still has cash and their debt cliff doesn’t come until 2029. There’s round half a billion dollars a year in debt due during the remainder of this year and each of the next two years before $1.8 billion must be paid or refinanced. Bizarrely, JetBlue is retreating from New York, closing bases, even as it buys more slots at New York LaGuardia out of the Spirit Airlines bankruptcy estate. Topics on this page