Fitch has also upgraded JBLU's unsecured rating to 'BB-/RR4' from 'B+/RR4' and affirmed JetBlue's senior secured credit facility at 'BB+/RR1'.
Debt reduction in 2015 outpaced Fitch's prior expectations, as JBLU utilized a portion of its savings from lower jet fuel costs to improve its balance sheet.
JBLU's EBIT margins expanded by more than 10 percentage points in 2015, outpacing the margin improvement generated by its competitors.
Should fuel prices remain within the forecasted range, JBLU could spend nearly $300 million less on jet fuel than it did in 2015 and nearly $860 million less than it did in 2014, though the recent volatility in crude prices makes potential savings difficult to estimate.
The larger gauge of the A321 and the additional seat density on JBLU's existing planes should help to control unit costs.
Revenue pressures at JBLU will be partially offset by the growth of its 'fare options' product.
Fitch expects JBLU's leverage to continue declining at least through 2016 driven both by higher expected EBITDAR (lower fuel prices, revenue enhancing initiatives) and through significant incremental debt reduction.
Fitch expects JBLU to produce FCF approaching or potentially exceeding $600 million in 2016, marking a sharp contrast with prior years when FCF was minimal or slightly negative.
Financial flexibility is also supported by JBLU's growing base of unencumbered assets.
JetBlue Technology Ventures, a wholly-owned subsidiary of JetBlue (NASDAQ: JBLU
) located in Silicon Valley, California, invests in, incubates, and partners with early stage startups.
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