JetBlue Defers Delivery of 21 Airbus Jets
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JetBlue Airways Corp., the discount carrier partly owned by Germany’s Deutsche Lufthansa AG, said it deferred deliveries of 21 Airbus SAS A320 jets to further slow its expansion amid higher jet-fuel prices.
The aircraft have been delayed until 2014 and 2015 instead of arriving next year through 2011, JetBlue said in a statement yesterday. The New York-based airline also said it plans to sell $160 million in debt that can be converted into stock, with the proceeds going to pay existing borrowings.
JetBlue joins carriers such as AMR Corp.’s American Airlines in curbing growth and paring costs to blunt an 83% surge in fuel prices in the past year. JetBlue now will add 11 planes in 2009 through 2011, down from a planned 32.
“This is the kind of thing that has to happen right now and is absolutely rational,” an analyst of Avondale Partners in Kansas City, Mo, who rates JetBlue shares “market perform” and doesn’t own them, Robert McAdoo, said. “This is the functional equivalent of American cutting back.”
The chief executive officer of JetBlue, Dave Barger, said in the statement that “it is essential to take a more financially conservative approach to managing our business.” Pushing back the aircraft deliveries will mean taking on less debt and enhancing access to funds, he said.
JetBlue rose 21 cents, or 5%, to $4.41 at 5:19 p.m. New York time in Nasdaq Stock Market composite trading. While the shares have fallen 25% this year, that’s the fourth-best performance among 14 carriers in the Bloomberg U.S. Airlines Index.
The deferred deliveries were announced as American began detailing cuts for its May 21 plan to reduce American capacity by as much as 12%. American, the world’s largest airline, said it will drop flights between Chicago and Buenos Aires and Chicago and Honolulu.
JetBlue said last month that its capacity will shrink for the first time ever in the fourth quarter as the airline sells six planes to trim costs. It also earlier pared 2008 expansion to between 3% and 5% from a previous plan of as much as 8%.
