Oct 26 (Reuters) - JetBlue Airways sought to reassure investors about its financial health on Monday despite posting a bigger-than-expected quarterly loss, as a sharp selloff in its bonds and mounting restructuring concerns cast a shadow over the airline's turnaround.
The carrier raised its full-year forecast for seat revenue growth to 13.5% to 14.5%, from its earlier range of 10% to 12.5%, signaling confidence in sustaining higher fares.
JetBlue's shares jumped 11% in choppy trading after the bell.
They had closed down nearly 10% on Monday following a report that the airline's creditors were working with restructuring advisors amid mounting debt concerns. Shares have fallen 48% year to date, while short interest is at 26%.
The airline said it ended the quarter with $2.2 billion of liquidity and $2.8 billion in unencumbered aircraft and engine assets, after it updated the appraisals of its fleet and engines. Total debt at the end of the September quarter stood at $8.39 billion, lower than last quarter's nearly $8.5 billion, while cash and cash equivalents dropped to $1.26 billion from $1.66 billion.
However, JetBlue reiterated its positive operating margin target of $1 in earnings per share and positive free cash flow in 2028.
The company expects its operating margin to improve by one to two points in the fourth quarter, even with the price of fuel being 85% higher year over year.
JetBlue said it was able to recover 87% of its fuel costs in the third quarter and is benefiting from a fairly strong revenue environment as fares have been increasing across the industry and customers continue to fly without any meaningful reduction in volume.
Airlines in the US have so far relied on fare hikes, checked baggage fees and capacity controls to boost revenue, as they contend with volatile fuel prices that have made it harder to forecast costs and earnings. The rise in jet fuel prices has outpaced fare hikes by airlines.
JetBlue said it paid an average of $3.91 per gallon of fuel in the July-September quarter, up 57% from a year ago, and slightly below the rate of $3.96 a gallon it forecast last month. Unit revenue, a measure of pricing power, rose just 18.4%.
The airline posted an adjusted loss of 60 cents per share for the three months to September 30, compared with a 40-cent loss in the year-ago period. Analysts expected a loss of 55 cents per share, according to data compiled by LSEG.
(Reporting by Nandan Mandayam in Bengaluru and Doyinsola Oladipo in New York; Editing by Devika Syamnath and Diti Pujara)
