Bloomberg.com: Germany

May 27 (Bloomberg) -- JetBlue Airways Corp., the discount carrier partly owned by Germany's Deutsche Lufthansa AG, said it deferred deliveries of 21 Airbus SAS A320 jets to further slow its expansion amid higher jet-fuel prices.

The aircraft have been delayed until 2014 and 2015 instead of arriving next year through 2011, JetBlue said in a statement today. The New York-based airline also said it plans to sell $160 million in debt that can be converted into stock, with the proceeds going to pay existing borrowings.

JetBlue joins carriers such as AMR Corp.'s American Airlines in curbing growth and paring costs to blunt an 83 percent surge in fuel prices in the past year. JetBlue now will add 11 planes in 2009 through 2011, down from a planned 32.

``This is the kind of thing that has to happen right now and is absolutely rational,'' said analyst Robert McAdoo of Avondale Partners in Kansas City, Missouri, who rates JetBlue shares ``market perform'' and doesn't own them. ``This is the functional equivalent of American cutting back.''

JetBlue Chief Executive Officer Dave Barger said in the statement that ``it is essential to take a more financially conservative approach to managing our business.'' Pushing back the aircraft deliveries will mean taking on less debt and enhancing access to funds, he said.

JetBlue rose 21 cents, or 5 percent, to $4.41 at 5:19 p.m. New York time in Nasdaq Stock Market composite trading. While the shares have fallen 25 percent this year, that's the fourth- best performance among 14 carriers in the Bloomberg U.S. Airlines Index.

JetBlue, American

The deferred deliveries were announced as American began detailing cuts for its May 21 plan to reduce U.S. capacity by as much as 12 percent. American, the world's largest airline, said it will drop flights between Chicago and Buenos Aires and Chicago and Honolulu.

JetBlue said last month that its capacity will shrink for the first time ever in the fourth quarter as the airline sells six planes to trim costs. It also earlier pared 2008 expansion to between 3 percent and 5 percent from a previous plan of as much as 8 percent.

This year's initial target already marked a retreat from JetBlue's annual growth in seating capacity of more 20 percent earlier this decade. That expansion was the fastest among major U.S. airlines, boosting JetBlue's net debt fivefold from 2003 through the end of 2007.

The new debt sale will be divided into two $80 million public offerings, JetBlue said. Morgan Stanley & Co. and Merrill Lynch & Co. will be joint managers, JetBlue said.

Credit-default swaps linked to JetBlue bonds fell 240 basis points to 3,010 basis points, according to CMA Datavision in New York. The contracts, which are designed to protect bondholders against default, have surged almost sixfold in the past year. A rise in price indicates a decline in the perception of credit quality.

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

Bloomberg.com: Germany

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