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JetBlue CEO says that bankruptcy is unlikely this year, despite rising fuel prices amid Iran war

JetBlue Airways CEO Joanna Geraghty said that the carrier would not be considering bankruptcy this year. This was according to a memo viewed by on Monday.

The cost of jet fuel has risen dramatically after U.S. and Israeli strikes on Iran, which disrupted the Strait of Hormuz - a vital waterway for oil flow around the world. This is the biggest shock to the aviation industry since the COVID-19 epidemic.

New York's carrier secured a $500-million debt financing commitment backed by 22 aircraft with the option to raise $250-million more using additional planes as collateral.

Geraghty stated in an internal memo that the airline had access to additional capital and ample liquidity.

Last week, a video clip featuring JetBlue founder David Neeleman (who ran the airline from 2007 to 2013) warning that it might face bankruptcy this year became viral on social networks. On Monday, a person who is familiar with the situation confirmed that the video was authentic.

Since the Iran War began, jet fuel prices have almost doubled, leaving airlines with a dilemma between increasing expenses and tickets that are already sold.

Fuel costs are on the rise, and this puts more pressure on smaller airlines like JetBlue. They have less financial flexibility and are more exposed to uncertainty. The Middle East conflict, say industry executives, could change the dynamics of the airline industry.

In the memo, Geraghty stated that there has been speculation about possible consolidation in the airline industry and questions regarding Spirit Airlines' future.

The outcome of any further consolidation is uncertain.

JetBlue aimed to "regain stability" and begin reaping the rewards of a turnaround that was launched in 2024. The airline focused on cost control, route optimization, and deferring aircraft delivery. High fuel prices threaten to 'derail' that plan.

In the memo, Geraghty stated that "we're operating in a more challenging environment than we expected at the start of the year in particular as it relates fuel prices." Reporting by Shivansh Tiwary in Bengaluru and Megavarshini G. Somasundaram; editing by Maju Samuel, Pooja Deai

(source: Reuters)