Due to the dramatic loss of revenue, JetBlue has secured a new liquidity facility. On March 13, 2020, JetBlue entered into a delayed draw term loan credit agreement that provides for a term loan facility of up to $1bn. JetBlue has drawn down the full amount to use the proceeds for general corporate purposes.
The term loans are priced at a variable rate equal to LIBOR (but not less than 1% per annum), plus a margin of 1.75% per annum, or at JetBlue’s election, another rate based on certain market interest rates.
The loans are secured on liens on a portfolio of 24 A321s and 36 spare engines comprising: 22 V2500s, 10 CF34-10s and four PW1133Gs. JetBlue is also required to maintain unrestricted cash and cash equivalents and unused commitments available under all revolving credit facilities (including the term loan facility) of no less than $550 million.
Amortisation payments equal to 0.25% of the outstanding principal of the term loan are payable each quarter during the term, with the remaining outstanding principal amount to be repaid in a single installment on the maturity date on March 15, 2021.
Morgan Stanley is administrative agent as well as lender with Goldman Sachs, Barclays and BNP Paribas.
In a letter to staff, CEO Robin Hayes confirmed that in addition to securing this new line of credit, JetBlue has stated that it is seeking to reduce its capital expenditure, specifically speaking to Airbus to slow deliveries and reduce aircraft pre-delivery payments (PDPs).
In the same note, Hayes admitted that even with the airline’s cash reserves, it would need “significant government support to help us through these losses” and that it is coordinating with Airlines for America (A4A) and other US airlines to “ensure government leaders understand the threat to our global economy if air travel is not supported”.