Moody's rates JetBlue convertibles B2

Moody's Investors Service said it has assigned a senior implied rating of Ba3 to JetBlue Airways Corp. and a B2 rating to the company's $175 million 3.5% senior unsecured convertible notes.

The outlook is stable.

Moody's said the ratings balance the positive attributes of JetBlue's success in generating superior operating margins through low operating costs and high load factors against the risks inherent in the company's continued plans for aggressive growth.

The company's growth plans will place substantial demands on JetBlue management to control unit costs as the company's operations become increasingly complex and its existing fleet ages, to continue to identify profitable and high-usage routes on which to deploy its growing fleet of A320 aircraft and successfully identify profitable opportunities for the smaller and higher unit cost ERJ190 aircraft that begin to be delivered in 2005.

Other challenges include the company's need for ongoing capital markets access to finance the scheduled delivery of these aircraft, and the company's ability to maintain its corporate culture while adding the large numbers of new employees demanded by that growth.

The ratings outlook is stable as Moody's said it anticipates lease adjusted debt metrics, unit revenues and costs to remain at about current levels through the end of 2004 and any risk of their deterioration to occur as the pace of growth and complexity of operations begins to change in the latter half of 2005 and into 2006.

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