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S&P Upgrades JetBlue Airways (JBLU) to 'B+'; Notes Improving Financial Performance

May 19, 2015 12:27 PM EDT

Standard & Poor's Ratings Services today said that it has raised its corporate credit rating on JetBlue Airways (Nasdaq: JBLU). to 'B+' from 'B'. The outlook is stable.

At the same time, we raised all of our issue-level ratings on the company's debt by one notch. Our '4' recovery rating on the company's unsecured debt remains unchanged, indicating our expectation for average (30%-50%; at the high end of the range) recovery in the event of a default.

"Our upgrade on JetBlue reflects its improved operating performance and reduced debt, which have strengthened the company's credit measures," said Standard & Poor's credit analyst Betsy Snyder. As of March 31, 2015, JetBlue's trailing-12-month funds from operations (FFO)-to-debt ratio was 28% and its debt-to-EBITDA metric was 2.9x. We expect the company to maintain its stronger operating performance, due in large part to lower fuel prices, keeping its credit metrics relatively stable through 2016.

The stable outlook reflects our expectation that JetBlue's credit metrics will remain relatively consistent through 2016.

We could raise our ratings on JetBlue if the company's operating performance continues to improve, based on higher than expected revenue growth, and it continues to reduce its debt, increasing its FFO-to-debt ratio to over 40% on a sustained basis.

Although unlikely, we could lower the ratings if JetBlue's operating performance is affected by weaker-than-expected demand and/or substantially higher fuel prices, causing the company's FFO-to-debt ratio to fall below 20% on a sustained basis.



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