AirFrnt From United States of America, joined Jul 2004, 2775 posts, RR: 43 Reply 2, posted (6 years 1 week 10 hours ago) and read 2103 times:
Quoting Rwy04LGA (Thread starter): jetBlue Airways' credit rating was cut one step further to B3, six levels below investment grade bt Moody's Investors Service, after the LCC posted losses for all of 2006 and the 1st Q of 2007.
This is horrible news for JetBlue. Dropping credit levels means that it costs more to finance jet purchases, and other large non-capital expenditures. Depending on the covenants that they have with existing loans, that might retroactively apply to previous capital as well.
The company's ratings "were downgraded because of the continued high level of financial leverage following several years of rapid, largely debt-financed growth of its aircraft fleet," Moody's said in a news release.
Another factor was "weak financial results at JetBlue during a relatively good operating environment for the airlines," Moody's said.
The Jetblue debt game always depended on their revenue growing fast enough to eclipse the high level of debt that they took on. Jetblue's inability to fill their fleet, means the debt will start slowly strangling them unless they can boost their operating margins. Not good.