JetBlue Shares Fall Following $400 Million Convertible Notes Offering Announcement

JetBlue Airways Corporation has announced plans to raise $400 million through an offering of convertible senior notes, which are due in 2029. Following this announcement, the company’s shares experienced a nearly 6% decline in premarket trading.

Additionally, JetBlue may permit initial buyers to acquire an extra $60 million in notes within 13 days of the original issuance, as indicated in their announcement on Monday.

The airline stated that it intends to use the proceeds to repurchase a portion of its existing 0.50% convertible notes set to mature in 2026, contingent on market conditions. The funds will also cover offering-related fees and expenses, with any remaining proceeds allocated for general corporate purposes.

The offering is restricted to individuals believed to be “qualified institutional buyers” under an exemption from registration according to Rule 144A of the Securities Act of 1933, as amended. It is important to note that neither the notes nor the shares of JetBlue’s common stock issuable upon conversion will be registered under the Securities Act or any state securities laws, and may not be offered or sold in the United States without appropriate registration or exemptions.

Just last month, JetBlue’s shares experienced a notable increase after the airline reported an unexpected profit and outlined plans to defer $3 billion in aircraft spending until 2029 to enhance cash flow. The airline reported a profit of $25 million for the second quarter, although this reflected an 82% decline compared to the previous year. Analysts had forecasted a loss for that quarter.

JetBlue has not posted an annual profit since before the pandemic began. In recent months, the company has been focusing on cost-cutting measures and trimming unprofitable routes to mitigate losses amid rising expenses and increased competition in the domestic market.