JetBlue Airways Corporation (NASDAQ:JBLU) announced plans to raise $400 million through an offering of convertible senior notes due in 2029.
The company’s shares fell nearly 6% in premarket trading following the announcement.
The airline may also allow initial buyers to purchase an additional $60 million in notes within 13 days of the original issuance, according to a Monday announcement.
JetBlue said it will use the proceeds to repurchase a portion of its existing 0.50% convertible notes due in 2026, depending on market conditions. The funds will also cover fees and expenses related to the offering, with any leftover proceeds going toward general corporate purposes.
“The notes will only be offered to persons reasonably believed to be “qualified institutional buyers” in an offering exempt from registration in reliance on Rule 144A under the Securities Act of 1933, as amended,” the press release states.
“The notes proposed to be offered and any shares of JetBlue’s common stock issuable upon conversion of the notes will not be registered under the Securities Act or any state securities laws, and may not be offered or sold in the United States without registration or an applicable exemption from the registration requirements of the Securities Act or any applicable state securities laws.”
Shares in JetBlue surged sharply last month after the airline reported an unexpected profit and announced plans to defer $3 billion in aircraft spending through 2029 to boost cash flow.
The airline recorded a $25 million profit for the second quarter, marking an 82% decline from the previous year. Analysts had predicted a loss for the quarter.
JetBlue has not reported an annual profit since before the pandemic. In recent months, the company has been trimming unprofitable routes and cutting costs to stem losses amid rising expenses and a crowded domestic market.