JetBlue could increase unencumbered aircraft to 22

Washington DC
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JetBlue Airways could increase the number of unencumbered aircraft in its fleet to 22 by the end of the year.

The New York-based low-cost carrier will have between 18 and 22 aircraft that are free and clear of debt following the delivery of 14 aircraft this year, says James Leddy, senior vice-president and treasurer of JetBlue, at an investors day on 20 March. The airline had 11 unencumbered aircraft at the end of 2012.

"We are dialling down the balance sheet, the debt balance, and growing our productive asset base," he says.

JetBlue is scheduled to receive three Airbus A320s, four Airbus A321s and seven Embraer 190s this year, according to Flightglobal's Ascend Online database.

The airline plans to continue its strategy of paying cash or tapping the private bank market to finance its Airbus deliveries, says Leddy. The Embraer deliveries will be financed with export credit debt from the Brazilian development bank BNDES.

"Regarding the Airbuses, right now, the private financing markets are extremely attractive," he says, reiterating previous statements by JetBlue chief financial officer Mark Powers. "They're actually more attractive than the capital markets for us."

The carrier's relationship banks include BNP Paribas and DVB Bank.

Capital market underwriters have said that JetBlue is an attractive candidate for enhanced equipment trust certificate (EETC) debt for its fleet. Interest rates for senior notes issued by comparably rated US Airways achieved all-in coupons of between 4.625% and 5.9% last year, while Delta Air Lines and United Airlines have achieved coupons as low as 4% with slightly better ratings.

JetBlue is rated B- by Standard & Poor's (S&P) and B3 by Moody's. US Airways is rated the same while Delta is rated B and B2 by the agencies, respectively, and United B and Baa3, respectively.