JetBlue Airways' bondholders are bracing for trouble. A senior creditors group has retained restructuring advisory firm PJT Partners, the Wall Street Journal reported Friday, as the carrier's stock and bonds continue sliding toward levels last seen only in distress scenarios.

JetBlue shares closed Friday at $2.62, down 42% so far this year, according to CNBC's report, which cited the Journal's original story. As of June 30, the airline had $1.66 billion in cash on hand against $8.5 billion in debt and finance-lease obligations, per its own regulatory filings.

The bonds drawing the most attention are JetBlue's $2 billion of 2031 notes backed by its TrueBlue loyalty program — collateral airlines have increasingly leaned on in recent years to borrow against frequent-flyer points. Those bonds have fallen sharply since the summer, trading around 72 cents on the dollar in early October before sliding further this month, with some trackers putting them in the low-40-cents range by the time PJT was hired.

"JETBLUE REMAINS CONFIDENT IN ITS JETFORWARD STRATEGY AND THE PROGRESS BEING MADE TOWARD RETURNING TO SUSTAINED PROFITABILITY."

That's the company's official response to the restructuring-adviser news, relayed through CNBC — a clear signal JetBlue wants the move read as routine creditor housekeeping, not a prelude to Chapter 11. PJT Partners did not respond to a request for comment.

A Slow Bleed, Not a Sudden Crash

The distress has been building for months. Credit analysts flagged a potential "liquidity crunch looming by late 2027" as early as mid-October, when the loyalty-backed bonds first cracked below 75 cents, and the spread between those bonds and benchmark Treasury yields has blown out past 1,000 basis points — a level typically associated with companies the market views as serious bankruptcy risks.

Hiring a restructuring adviser doesn't mean creditors are forcing anything yet; it's a standard defensive step that lets bondholders organize and negotiate with a unified voice if JetBlue's finances keep deteriorating, or if the airline eventually needs to renegotiate its debt load. But the timing — just as shares and bonds both hit fresh lows in the same week — has investors on alert.

JetBlue has spent the past two years trying to turn around its finances under its "JetForward" plan, cutting unprofitable routes and leaning into partnerships after a blocked merger with Spirit Airlines. Whether that plan can outrun its balance sheet may now depend on how the next few months of bookings, fuel costs and cash flow play out.

A Wider Pattern on Wall Street

JetBlue isn't the only discount carrier whose debt has come under this kind of scrutiny. Loyalty-program-backed bonds became a popular financing tool across the industry in the years after the pandemic, when American, United and Delta all raised billions of dollars by pledging their frequent-flyer programs as collateral. The structure let weaker-credit airlines borrow at rates closer to those of their blue-chip rivals — but it also means a growing slice of airline debt now lives or dies on investor confidence in the loyalty program itself, not just the airline's planes and routes.

That's part of why JetBlue's slide has drawn outsized attention relative to its size. The carrier is far smaller than the "Big Four" U.S. airlines, but its bonds are watched as something of a bellwether for how far credit markets will extend patience to a mid-tier carrier that has now gone several years without a profitable one. A formal restructuring adviser hire, even a defensive one, tends to accelerate that scrutiny rather than calm it, since it signals bondholders themselves see enough risk to start organizing.

Analysts following the credit will be watching JetBlue's next quarterly results closely for any sign the cash burn is slowing — and whether the airline's own insistence that bankruptcy isn't on the table holds up as the bond market keeps pricing in the opposite.