JetBlue’s revenue +21%, and its loss widened

JetBlue grew revenue 21% and still lost money. 3Q26 revenue was $2.81bn, net loss widened to $257m from $143m, and the full-year margin guide worsened. Everyone else this season showed the same pattern. Of the carriers that have reported, JetBlue has the thinnest cushion to take it. So the story is about more than just earnings. Excluding special items and investment gains, the loss was $226m, or $0.60 a share. GuruFocus puts the consensus loss at $0.49, so this was about $0.11 below the adjusted figure and $0.19 below the GAAP figure. Fares did the work. The average fare rose 19.2% to $245.11, and load factor fell 1.5 points to 83.6%. JetBlue charged more and filled fewer seats. The same story as Delta, United, and American. Revenue rose about $490m. Fuel took about $330m of it, roughly 67%, compared with 56% to 72% for the other four. Non-fuel costs took another $205m or so. Operating expenses rose $535m in all, so the operating loss widened to $144m from $100m. That's our arithmetic from the reported growth rates, and it ties to the reported loss. JetBlue's own number is different. It says it recaptured about 87% of the higher fuel cost. That measures fuel recapture, a different thing from revenue versus fuel, and JetBlue doesn't say how it calculates it. Even at 87%, the airline lost more, because non-fuel unit costs rose 7.0%. American held that to 3.0%. The full-year adjusted operating margin guide is now -4.5% to -6.5%. In July it was -2% to -5%. The full-year fuel assumption rose to $3.95 a gallon from $3.49. For 4Q26, JetBlue assumes $4.64, based on the October 16 forward curve. That aligns with United at $4.80 and American at $4.70. The 4Q26 unit revenue guide is up 18% to 22% on capacity up 3% to 4%. The number to question is CASM ex-fuel, guided between -1% and +1% after a 7.0% rise in 3Q26. Capacity growth will help spread fixed costs, but a swing of that size needs an explanation, and we haven't seen one. JetBlue also expects operating margin to expand 1 to 2 points year over year in 4Q26. The 2028 target of at least $1 in EPS assumed fuel at $3.00 a gallon. Fuel is guided at $3.95 for this year and $4.64 for the fourth quarter. The CFO, Ursula Hurley, restated the goal. We'd want to hear what fuel price it holds at now. JetBlue is growing hardest in the one place where a rival just left. Fort Lauderdale capacity is up more than 65% and RASM there is up nearly 15%. JetBlue plans more than 150 daily departures at peak this winter. FLL was a core Spirit base. JetBlue doesn't tie the two in its release, so we're reading that link, and it fits what we wrote on capacity discipline. The question is how long a 15% unit revenue premium survives 65% more seats. Liquidity is $2.2bn including a $600m undrawn facility, and cash and investments were about $1.63bn at quarter-end. Total debt is $8.39bn. Stockholders' equity fell to $1.34bn from $2.12bn at year-end, down 37%. A further $250m of aircraft-backed financing is due in 4Q26, and JetBlue plans to sell one A321XLR. Unencumbered assets are about $7bn, including $2.8bn in aircraft and engines. jetBlue tails The commercial pieces keep moving. Loyalty revenue is up 20%, Blue Sky members have redeemed more than 1.1bn points on United, and BlueFirst, the new domestic first-class product, is on sale on more than 30 routes, with the first revenue flight on December 8, Boston to Fort Lauderdale. CEO Joanna Geraghty said she is "very encouraged by the progress we made in the third quarter." The ratings say distress, not collapse. Fitch cut JetBlue to CCC+ in April, and S&P followed on June 8, from B-. S&P's outlook is stable, and it sees no default or restructuring within 12 months, but it expects no positive free cash flow until 2028 and leverage near 10x by the end of 2027. The market is less polite. The $2bn of TrueBlue-backed 2031 notes, with a 9.875% coupon, fell to about 72 cents on the dollar in early October, a yield near 19%. They were at 84 cents in July. The stock went from $6.07 on July 30 to $3.84 on October 9. Cash and investments fell from about $2.48bn at year-end to about $1.63bn at September 30. That is roughly $850m in nine months (our arithmetic). Liquidity of $2.2bn includes the $600m undrawn line. Scheduled debt and finance lease payments are $478m in 2027, $582m in 2028, and $1.835bn in 2029. S&P says liquidity covers the projected deficits through 2027. The wall is 2029. The trap sits in the TrueBlue terms. The financing requires at least $750m of quarter-end liquidity and a 1.75x debt-service coverage test that starts this September. If it fails, loyalty cash goes to the lenders. We have not found whether JetBlue passed the first test. That is the question for the call. Semafor reported in March that JetBlue was working with advisors on a possible sale, with scenarios mapped for United, Alaska and Southwest. We have seen no on-record comment from JetBlue. Gary Leff of View from the Wing calls a restructuring, possibly with a sale, much more plausible than a shutdown, and says a filing might not wait until 2029. That fits the numbers. JetBlue still has about $7bn of unencumbered assets, loyalty revenue up 20%, and United access to its JFK slots from 2027. It can sell things for a while. Call commentary, the stock reaction, and a clean consensus. We also have no explanation of the 4Q26 cost guide, JetBlue's view of 2027 capacity, or the result of the TrueBlue coverage test. JetBlue can least afford a fuel number above $4.50 a gallon. It is guiding $4.64. This airline is on the thinnest ice.

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