http://biz.yahoo.com/ap/080527/jetblue_plane_order.html
AP
JetBlue delays order of 21 planes for 4 to 5 years
Tuesday May 27, 6:48 pm ET
By Adam Schreck, AP Business Writer JetBlue delays taking delivery of 21 new Airbus jetliners for 4 to 5 years, citing fuel costs
NEW YORK (AP) -- JetBlue Airways Corp. plans to significantly slow its fleet growth, saying Tuesday it will put off buying 21 new Airbus jetliners for four to five years as it struggles to cope with soaring fuel costs.
The A320 planes, which were originally scheduled for delivery between 2009 through 2011, will now be delivered in 2014 and 2015. By delaying delivery, JetBlue will be able to hold off paying for the planes and will save on the additional operating expenses they would bring.
"In the face of escalating fuel costs, we believe it is essential to take a more financially conservative approach to managing our business," Chief Executive Dave Barger said in a statement. "The aircraft deferrals we announced today will help us further moderate our growth rate in 2009 and beyond, which will enhance liquidity and defer future debt obligations."
Spokeswoman Alison Eshelman declined to say how much the Forest Hills, N.Y.-based airline expected to pay for the aircraft, or how much it hoped to save by deferring delivery. The planes carry a list price of $76.9 million, but carriers typically negotiate steep discounts for larger orders.
The single-aisle A320 is one of two aircraft JetBlue operates and is configured with 150 seats. The carrier's existing fleet includes 107 of the planes and 34 smaller Embraer E190 aircraft.
JetBlue plans to take delivery of nine new A320s in 2008 and sell the same number by the end of the year, spokesman Bryan Baldwin said.
Independent aviation consultant Mike Boyd said delaying the purchase makes good financial sense.
"Most of those planes were meant for expansion. You don't expand at $4-a-gallon jet fuel," Boyd said. "When you have a downturn ... not taking on the debt and the problems with 21 new airplanes, that's a good move."
Eshelman said JetBlue was not planning additional cutbacks in capacity this year. The carrier last month reduced its capacity growth forecast to 3 to 5 percent, down from a previous plan to grow by 5 to 8 percent.
Meanwhile, JetBlue said it plans to offer $160 million worth of bonds that can be converted into stock and come due in 2038. Morgan Stanley & Co. and Merrill Lynch & Co. are acting as joint book-running managers for the offering.
Part of the proceeds from the offering will be placed into an escrow account to pay interest for the debentures during the first three years, while the remainder will be used to pay off other bonds that mature five years earlier.
Investors have soured on JetBlue and many other U.S. carriers in recent months as fuel costs have skyrocketed and the economy has slowed. In January, JetBlue sold a 19 percent stake to German airline Deutsche Lufthansa AG in exchange for a much-needed cash injection of $300 million.
Concerns remain, however. Two weeks ago, credit rating firm Fitch Ratings cut JetBlue's debt ratings further into junk status, saying that soaring fuel prices and "a softening revenue outlook that will likely drive larger losses and weakened free cash flow during the remainder of 2008."
Eshelman dismissed questions about JetBlue's cash position in light of Tuesday's order delay and debt offering.
"We believe our current cash is more than adequate to cover our current debt without this offering. But we're offering this because we believe it will preserve liquidity," she said. "In this environment, cash preservation is imperative."
JetBlue shares fell 27 cents, or 6.1 percent, to an all-time low of $4.14 in after-hours electronic trading, from their regular session close at $4.41.
AP
JetBlue delays order of 21 planes for 4 to 5 years
Tuesday May 27, 6:48 pm ET
By Adam Schreck, AP Business Writer JetBlue delays taking delivery of 21 new Airbus jetliners for 4 to 5 years, citing fuel costs
NEW YORK (AP) -- JetBlue Airways Corp. plans to significantly slow its fleet growth, saying Tuesday it will put off buying 21 new Airbus jetliners for four to five years as it struggles to cope with soaring fuel costs.
The A320 planes, which were originally scheduled for delivery between 2009 through 2011, will now be delivered in 2014 and 2015. By delaying delivery, JetBlue will be able to hold off paying for the planes and will save on the additional operating expenses they would bring.
"In the face of escalating fuel costs, we believe it is essential to take a more financially conservative approach to managing our business," Chief Executive Dave Barger said in a statement. "The aircraft deferrals we announced today will help us further moderate our growth rate in 2009 and beyond, which will enhance liquidity and defer future debt obligations."
Spokeswoman Alison Eshelman declined to say how much the Forest Hills, N.Y.-based airline expected to pay for the aircraft, or how much it hoped to save by deferring delivery. The planes carry a list price of $76.9 million, but carriers typically negotiate steep discounts for larger orders.
The single-aisle A320 is one of two aircraft JetBlue operates and is configured with 150 seats. The carrier's existing fleet includes 107 of the planes and 34 smaller Embraer E190 aircraft.
JetBlue plans to take delivery of nine new A320s in 2008 and sell the same number by the end of the year, spokesman Bryan Baldwin said.
Independent aviation consultant Mike Boyd said delaying the purchase makes good financial sense.
"Most of those planes were meant for expansion. You don't expand at $4-a-gallon jet fuel," Boyd said. "When you have a downturn ... not taking on the debt and the problems with 21 new airplanes, that's a good move."
Eshelman said JetBlue was not planning additional cutbacks in capacity this year. The carrier last month reduced its capacity growth forecast to 3 to 5 percent, down from a previous plan to grow by 5 to 8 percent.
Meanwhile, JetBlue said it plans to offer $160 million worth of bonds that can be converted into stock and come due in 2038. Morgan Stanley & Co. and Merrill Lynch & Co. are acting as joint book-running managers for the offering.
Part of the proceeds from the offering will be placed into an escrow account to pay interest for the debentures during the first three years, while the remainder will be used to pay off other bonds that mature five years earlier.
Investors have soured on JetBlue and many other U.S. carriers in recent months as fuel costs have skyrocketed and the economy has slowed. In January, JetBlue sold a 19 percent stake to German airline Deutsche Lufthansa AG in exchange for a much-needed cash injection of $300 million.
Concerns remain, however. Two weeks ago, credit rating firm Fitch Ratings cut JetBlue's debt ratings further into junk status, saying that soaring fuel prices and "a softening revenue outlook that will likely drive larger losses and weakened free cash flow during the remainder of 2008."
Eshelman dismissed questions about JetBlue's cash position in light of Tuesday's order delay and debt offering.
"We believe our current cash is more than adequate to cover our current debt without this offering. But we're offering this because we believe it will preserve liquidity," she said. "In this environment, cash preservation is imperative."
JetBlue shares fell 27 cents, or 6.1 percent, to an all-time low of $4.14 in after-hours electronic trading, from their regular session close at $4.41.
