JetBlue uncertain of Airbus debt financing terms, considers cash

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JetBlue Airways says that it may use cash to pay for deliveries of seven Airbus A320 family aircraft that will be delivered this year, citing its inability to guarantee attractive debt financing terms.

"Although we believe debt and/or lease financing should be available for our remaining aircraft deliveries, we cannot give any assurance that we will be able to secure financing on attractive terms, if at all," says the New York-based low-cost carrier in a stock exchange filing on 9 May. It defines favourable terms as those relative to its weighted average cost of debt, which was 4.5% for long-term debt at the end of March.

The deliveries include three A320s and four A321s.

JetBlue previously said that it would use cash or bank debt for the aircraft and, according to various sources, began seeking financing proposals from lenders in March.

The airline financed one Embraer 190 delivery with $24 million in export credit debt from Brazilian development bank BNDES during the first quarter. The floating rate debt matures in 2025.

JetBlue has five more E-190 deliveries scheduled for this year.

Cash and cash equivalents nearly doubled to $346 million at the end of March from $182 million three months earlier, according to the filing. Cash was down nearly 47% from $652 million a year earlier.

Long-term debt and capital lease obligations rose nearly 40% to $2.25 billion at the end of the first quarter versus the prior quarter. Debt was down 19.5% year-on-year.

JetBlue made $52 million in principal payments during the quarter, according to the filing.

Capital expenditure was $83 million in the quarter, with $48 million related to aircraft.

JetBlue entered a $350 million revolving credit facility with Citi in April. Slots at New York's John F. Kennedy and LaGuardia airports, Newark Liberty International and Ronald Reagan Washington National secure the three-year revolver.