JetBlue stock surges as company outlook calms investors

JetBlue Airways reported a bigger loss in the third quarter compared with last year, but shares surged as the carrier's upbeat forecast that it will return to profitability appeared to calm investors after a Monday rout.

JetBlue stock rose 18% in trading Tuesday after hitting a new low a day earlier as investors fretted about the company's financial future.

The Monday drop came after the Wall Street Journal reported Friday that a group of the airline's senior creditors is reportedly working with restructuring adviser PJT Partners.

"We have no intention, no plans to file for bankruptcy. We are not engaged with any restructuring company," CEO Joanna Geraghty told CNBC on Tuesday. "We are focused on delivering to our shareholders what we laid out for at the beginning of our turnaround plan."

She said there is a "fundamental disconnect between the narrative in the bond market and what our financial results actually demonstrate."

The New York airline late Monday reported that its revenue per available seat mile, a key metric measuring how much operating revenue a carrier generates for every seat flown one mile, would be up as much as 22% in the fourth quarter, bringing the annual increase to an expected 13.5% to 14.5%

"We're not seeing any meaningful pushback," Geraghty said in the interview.

JetBlue on Monday posted a net loss of $257 million for the three months ended Sept. 30, compared with a loss of $143 million a year earlier. The carrier's fuel bill rose 61% to $868 million.

The carrier said it ended the quarter with $2.2 billion in liquidity and that its unencumbered asset base is now $7 billion, including $2.8 billion in aircraft and engines.

JetBlue had total debt of $8.4 billion as of Sept. 30, the carrier said in its earnings filing Monday.

"Importantly, we believe we have the liquidity and financing options to create a strong bridge to at least $1 EPS and positive free cash flow in 2028," CFO Ursula Hurley said in a statement. "We remain focused on disciplined cost execution and capital management as we work toward sustained profitability and positive free cash flow."

Here is what JetBlue reported in the third quarter compared with Wall Street estimates compiled by LSEG:

JetBlue last posted an annual profit in 2019. The airline is in the middle of a multiyear turnaround plan that includes cutting cuts and boosting revenue by investing in premium seats, like a new domestic first class section that recently went on sale.

Fuel costs have eaten into airline profits across the board. JetBlue said travel demand has remained strong despite higher fares.

JetBlue's average fares rose more than 19% to $245.11 in the third quarter from $205.67 in the year-earlier period.

The airline has struggled not just with higher costs but also with competition from larger rivals.

It sought to acquire now-defunct carrier Spirit Airlines, but that deal was upended by a federal judge who ruled it was anticompetitive. A judge also blocked a regional partnership between JetBlue and American Airlines, which the airlines argued would help them compete better against carriers in the congested Northeast U.S. JetBlue now has a partnership with United Airlines.

The carrier expects to grow capacity no more than 4% in the current quarter. One bright spot, executives said, has been expanding at Fort Lauderdale-Hollywood Airport, the former home hub of Spirit, which collapsed in May.