S&P downgrades JetBlue deeper into junk as high fuel costs dent recovery

June 8 (Reuters) - Global ratings ‌agency S&P said ​on ​Monday it had downgraded JetBlue Airways to "CCC+" from "B-," pushing the carrier further into junk territory as high jet fuel ‌costs hamper its recovery.

The low-cost carrier has been trying ⁠to restore profitability through cost cuts, network changes and efforts to improve operational reliability, ‌but higher fuel prices ‌have complicated its turnaround plans.

Budget and low-cost carriers have been particularly exposed to the fuel-price spike linked to the Iran war, with ​limited ability to pass on higher costs to consumers without risking demand in a price-sensitive travel market.

"Given the ongoing Middle East ⁠conflict and material rise in oil and jet fuel prices, we expect JetBlue's operating performance ​to be significantly pressured over at least the next 12 months," S&P said.

"A strong demand environment continues to support ​higher air fares, but we no ‌longer expect positive free cash flow generation until 2028 and project leverage to be about 10x by the ⁠end of 2027."

A deeper junk rating could raise JetBlue's borrowing costs and limit its access to capital markets at a time when it may need ⁠additional liquidity to finance its operations.

In April, ratings agency Fitch also downgraded the ​New York-based carrier to "CCC+" from "B-" citing continued operating losses and negative free cash flow.

S&P kept its outlook on JetBlue stable, expecting the airline to maintain enough ‌liquidity to cover projected free cash flow deficits through 2027, with no significant near-term maturities and no ‌default or restructuring anticipated over the next 12 months.

Earlier this year, JetBlue ⁠secured a $500 million debt financing ‌commitment backed by up ​to 22 aircraft, with an option to raise an additional $250 million.

(Reporting by Shivansh Tiwary in Bengaluru; Editing by ‌Leroy Leo)

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