Moodys revises Jetblue debt to Negative

[lowecur]

What me worry, said Alfred E. Neeleman? He should worry, as borrowing has just become more expensive for Jetblue. Too much, too soon? Time will tell.

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh17417_2005-08-01_15-42-28_wna5595_newsml

 

[FlyBoeingJets]

Good on you Lowecur. Your opinion looks less biased today.

 

[Lrjet55]

Can someone with, perhaps, a finance background expand on this comment a little. What exactly does this all mean.

NEW YORK, Aug 1 (Reuters) - Moody's Investors Service on Monday revised the outlook on JetBlue Airways Corp.'s (JBLU.O: Quote, Profile, Research) debt ratings to negative from stable, citing a difficult U.S. passenger market.
Moody's also affirmed the airline's "Ba3" corporate family debt rating, which is three steps below investment-grade

What

 

[dane]

new name!

Allright,

I will make the suggestion, lets rename Jetblue to:

Debtblue


Regards,

dane

 

[klhoard]

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Hmmmm, I guess the payments are finally due on those brand new airplanes??
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Will that be Euro's or Dollars??
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[lowecur]

Can someone with, perhaps, a finance background expand on this comment a little. What exactly does this all mean. It means sqwat in the short term. Jetblue is a highly leveraged mega growth startup. With profits as lean as they are, and the unlikelyhood of a major liquidation anytime soon(other than Flyi), Jetblue will have to rely on an untested business plan to get Moodys to adjust their debt back to stable. Of course, I believe the 190 will be the ticket to do just that.




What

Moody's also affirmed the airline's "Ba3" corporate family debt rating, which is three steps below investment-grade.

In other words, high grade junk.

 

[Daddy]

Basically, the lower the grade the higher the risk to lend to that company and the higher the interest that company must pay to get money from bonds. For JBLU, this means it will cost them more money to borrow to buy aircraft or whatever...I imagine their lower margins are a big part of this downgrade...Moody's sees the lower margins on the latest report as an indication they they will be less likely (not UNlikely) to pay off their bonds going forward...as a pilot, you probably shouldn't worry...as an investor...who the he11 knows in this industry...

 

[General Lee]

I don't care what anyone says on this board----Jetblue IS NOT the next Peoplesexpress. Nothing will EVER go wrong for this airline, nothing. Neeleman is a genius, and his pay structure at Jetblue will keep that airline going forever, because that is how their business plan was created...


Bye Bye--General Lee

 

[FDJ2]

JBLU is still expected to be profitable throughout 2005, with an operating margin of between 5-7%. Although far less than the double digit margins of the past, it is still a profit. That being said, costs unrelated to fuel will continue to increase CASM at JBLU going forward. JBLU's SEC filing spells some of this out.

Depreciation and amortization increased 59.0%, or $10.3 million, due primarily to having 15.7 more average owned aircraft during the three months ended June 30, 2005 compared to the same period in 2004. Cost per available seat mile increased 26.6% primarily due to a higher percentage of our aircraft fleet being owned. Depreciation and amortization on an absolute and cost per available seat mile basis is expected to increase as a result of placing into service our new hangars in Orlando and at New York's John F. Kennedy International Airport, or JFK, and our training center including five simulators during the quarter which will be partially offset by reduced rent expense.

Maintenance materials and repairs increased 61.8%, or $5.2 million, due to having 15.7 more average operating aircraft in 2005 compared to the same period in 2004. Cost per available seat mile increased 28.9% due to the completion of 19 airframe checks in 2005 compared to 11 in 2004 and an increase in the average age of our fleet from 2.0 years to 2.5 years, partially offset by lower rates for airframe checks. Maintenance is expected to increase significantly as our fleet ages.

 

[BenderGonzales]

GeneralLee...

are you serious? You honestly can't see the parallels between Jetblue and People's Express/New York Air?

Jetblue has a good product that the customers like. That's fantastic! But as they grow as a company, as their employees become more senior, and as they deviate from their successful formula (i/e new E-Jets) they will find themselves at risk for failure.

Wall Street is obviously beginning to recognize that unfortunate reality.

 

[G4G5]

This is nothing that was not expected. With oil reaching $62 a barrel, I would expect further down grades.

 

[PCL_128]

GeneralLee...

are you serious? You honestly can't see the parallels between Jetblue and People's Express/New York Air?

I think the General was being very sarcastic on that one. Much like the General, I'm beginning to smell that all too familiar PeopleExpress stench. How long until the Daves get big enough egos to buy a few A340s to fly to Europe for $99/ticket? Don Burr and PeopleExpress were once the darlings of Wall Street and the media also. We all know how that turned out. Too much, too soon. Southwest took over 30 years to get as big as it is right now. They have always been very conservative and have never tried to overextend themselves. JetBlue is trying to move much too quickly, and it's going to bite them in the ass.

 

[lowecur]

I don't care what anyone says on this board----Jetblue IS NOT the next Peoplesexpress. Nothing will EVER go wrong for this airline, nothing. Neeleman is a genius, and his pay structure at Jetblue will keep that airline going forever, because that is how their business plan was created...


Bye Bye--General Lee

Sooooooooooo............When did you apply?

 

[Eagleflip]

PCL 128 wrote:

JetBlue is trying to move much too quickly, and it's going to bite them in the ass.

Well shucks...guess I'd better start dusting off my resume and figure out how to serve tables at the local Chili's now that industry visionary PCL has exposed us for what we are.

Fast growing, over-extended, greedy folks.

Blue folks, that is.

And General...again, your penchant for pomposity rears it's head. How unbecoming. Do you similarly rant about Spirit, Airtran and other LCC's pay scales?

Nah, changed my mind. I'll just stick things out and see how they turn up.

Seriously, I think G4G5 has a point. This oil situation has everyone on the defense. And I fear there is no end in sight for these high prices, given China and Korea's recent surge in oil imports. They don't intend on slashing their consumption any more than we do.

The solution, thus, is a reasonable fare increase to cover the additional cost of fuel. And to get that, we need pricing leverage. To get that we'll need either a. collusion (uh, that's illegal) , b. a reasonable approach to the competition in ticket pricing (unlikely) or c. a reduction in the number of seats available on any given segment (an unpalatable solution--the demise of a carrier).

 

[exagony]

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Hmmmm, I guess the payments are finally due on those brand new airplanes??
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Will that be Euro's or Dollars??
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PESOS!!!