Morning Commentary: Airline convertibles in focus; American Airlines, JetBlue gain

By Abigail W. Adams

Portland, Me., April 21 – Airlines were flying high on Thursday after American Airlines Group Inc. bested analyst expectations with earnings and forecast a return to profitability.

American’s 6.5% convertible notes due 2025 dominated activity in the space.

The notes rose more than 8 points outright with stock up 6%.

The notes were changing hands at 151.5 early in the session.

The notes were moving in line to slightly contracted on a dollar-neutral, or hedged, basis, a source said.

American Airlines’ stock was trading at $20.66, an increase of 6.03%, shortly before 11 a.m. ET.

The airline reported losses per share of $2.32 versus analyst expectations for losses of $2.39.

Forward guidance bested expectations with the airline expecting a return to profitability in the second quarter due to strong travel demand.

JetBlue Airways Corp.’s 0.5% convertible notes due 2026 were lifted by the results.

The convertible notes gained 2.5 points outright with stock up 6%.

They were changing hands at 89.25 early in the session.

The notes expanded 0.625 to 1 point on the move up.

The convertibles move on a theoretical delta in the mid-50s, a source said.

JetBlue’s stock was changing hands at $13.86, an increase of 6.17%, shortly before 11 a.m. ET.

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