彭博：美伊冲突推高航油价格，美国航空高收益债利差较1月翻倍至近400bp，JetBlue等中小航司再融资成本与流动性压力上升

As the US-Iran battle escalates, surging jet fuel prices are driving up borrowing costs for airlines, further dimming the prospects for smaller American carriers.

Spreads on airline bonds that carry high-yield ratings are sitting at almost 400 basis points — more than double where they were in January — as investors demand extra compensation for holding the debt of companies such as JetBlue Airways Corp. and American Airlines.

Rising fuel prices make airlines a riskier bet for lenders because fuel, along with labor costs, is among carriers’ biggest expenses. The war in Iran has sent costs soaring, with jet fuel on the Gulf Coast this week hitting its highest level in months.

The price airlines pay to issue new debt or refinance existing bonds and loans is likely to increase further, said Chad Campbell, a managing director at Barings who focuses on sub-investment grade companies in the industrials, transportation and aviation sectors.

“Now, with the conflict escalating and lasting longer than anticipated, future borrowing transactions are likely to require a premium to compensate for heightened risk,” Campbell said.

The shift has been evident already this year. United Airlines Holdings Inc. raised $2 billion across two bond deals in February before the war broke out, while Alaska Air Group Inc. raised $500 million in bonds in May. Despite carrying almost identical BB ratings, Alaska Air had to pay a yield of 6.5% for its five-year bond, compared with the 5.375% at which United priced its $1 billion five-year tranche.

“The story around airlines the first part of the year really has been around the Iran conflict and jet fuel prices,” said Joseph Rohlena, lead analyst of North American airlines at Fitch. “Roughly 20% of costs are jet fuel.”

Companies have boosted prices to offset the higher fuel expenses, with revenue per available seat mile at Delta Air Lines Inc. and JetBlue Airwaysincreasing by 11% year-over-year in the second quarter. Delta Chief Executive Officer Ed Bastian said in July that ticket prices will likely remain high.

Major US carriers have tempered their forecasts for earnings, though United joined rival Delta in saying that strong travel demand, particularly for premium and international offerings, has helped offset the rising costs.

But while giant carriers can absorb higher costs through revenues from robust international routes and luxury seats, smaller domestic airlines catering to a more price-sensitive clientele have less capacity for price increases. That’s a potential problem if a global refining capacity shortage — spurred by wars in Ukraine and the Middle East — keeps jet fuel prices high.

“The fare increases have been quite successful,” said Savanthi Syth, an airline equity analyst at Raymond James. However, “we do wonder what happens to the JetBlues and the Frontiers of the world if things get worse or stay really bad in terms of jet fuel prices.”

The pressure has already proven too much for Spirit Aviation Holdings Inc.. The discount carrier halted operations earlier this year after a tumultuous period during which it filed for bankruptcy several times.

With little sign of fuel prices easing anytime soon, investors are taking a hard look at smaller airlines’ debt.

JetBlue’s 9.875% bonds, backed by the company’s loyalty program, fell to as low as about 84 cents on the dollar in July from a February high of roughly 104 cents, after the company invited investors to an August meeting focused on its liquidity and balance sheet. The notes, due in 2031, recovered some of the losses after the company’s second-quarter earnings call later that month, but on Thursday the bonds were back around 84 cents.

JetBlue’s bonds comprise 12% of the high-yield airline bonds index, making it the second highest-weighted component. The airline is focused on strengthening revenue and cost discipline, given fuel prices are out of carriers’ control, said JetBlue spokesperson Derek Dombrowski.

Still, price volatility makes it difficult to determine for how long spreads will remain elevated and higher borrowing costs will persist.

“They feel more confident about the bookings that they’re going to get for the next six months of the year,” said Geoffrey Wilson, an analyst with S&P Global Ratings. “The one thing that remains the big uncertainty is fuel costs.”