JetBlue posts grim update, announces $500mn stock offering

JetBlue Airways (B6, New York JFK) expects to raise USD506.7 million after deducting expenses, in a new share offering to boost its liquidity, it announced in a stock exchange filing on December 1. It priced its underwritten public offering of 36.5 million shares of its common stock at USD14.40 per share. The number of shares was an increase from a separate filing issued earlier in the day, which quoted 35 million shares. The underwriters will have a 30-day option to acquire up to 5.475 million additional shares of common stock, the airline said, which was also an increase from the previously stated 5.25 million. JetBlue intends to use the net proceeds from the offering, which is expected to close on December 4, for general corporate purposes. The announcement came the day after JetBlue Airways revealed in a business update that its cash burn was likely to rise to between USD6 million and USD8 million per day in the fourth quarter, compared with an earlier forecast of USD4-6 million, an assumption based largely on recent booking trends. Anticipated flown capacity for the fourth quarter is now between 45% and 50% year-on-year, compared to a previously planned 45%. JetBlue aims to continue to manage capacity and align with demand on a rolling basis, it said.m “Booking trends remain volatile and the company continues to believe demand and revenue recovery will be non-linear through the fourth quarter and beyond,” the update said. “We cannot predict changes due to additional Covid-19 related disruptions or other issues.” The airline expected fourth-quarter revenue to be 70% lower than last year, worse than the 65% decline previously forecast. Besides booking trends, it also blamed the more pessimistic estimates on a delay in the receipt of cash tax refunds of approximately USD70 million, originally anticipated to arrive during the fourth quarter. As of November 27, JetBlue concluded, the company had cash and short-term investments of approximately USD2.8 billion.