JBLUJetBlue Airways Corporation (stock symbol)
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Fitch expects JBLU to use Brazilian export financing for its EMB 190 deliveries, and fund its other capital commitments through a combination of existing cash, operating cash flow and external funding.
The rapid spike in oil and jet fuel prices during February remains the biggest concern for JBLU and underscores the importance of industry capacity discipline, and the ability and willingness of carriers to raise fares.
industry, JBLU plans to add significantly more scheduled capacity in 2011.
However, Fitch expects JBLU to report material gains in RASM in 2010 as the economic recovery drives a significant pick-up in traffic while slow industry capacity growth and reduced fare sale activity boosts yields.
Fitch views the carrier's more manageable fleet plan as an important credit positive as JBLU and its competitors struggle to balance capacity with demand during a period of continuing economic weakness.
In late October, JBLU reported a loss of 2 cents per share for its third quarter, which was narrower than analysts' expected loss of 5 cents.
Fitch's ratings on JBLU reflect the dramatic run-up in jet fuel costs and growing evidence of a softening revenue outlook that will likely drive larger losses and weakened free cash flow during the remainder of 2008.
Supplemental sources of liquidity are constrained, however, and JBLU has no revolving credit facility in place.
A similar approach was taken last year when JBLU sold five A320s to help it reduce the available seat mile (ASM) growth rate.
By the end of Monday's trading, JBLU had rallied nearly five percent, perpetuating its uptrend.
During the past several weeks, JBLU shares have taken off with a G-force that would impress most Blue Angels.
JBLU expects losses to continue into 2006, with operating margins being negative in the first quarter.