By Dorothy Ma, Irene García Pérez and Sri Taylor JetBlue Airways Corp.’s already difficult year took a dramatic turn for the worse Thursday, with a sharp selloff in its securities signaling mounting investor doubts about the airline’s financial outlook.

Ahead of next week’s third-quarter earnings report, usually a bright spot for airlines, JetBlue’s stock fell nearly 10% to close at $2.65, its lowest level since going public in 2002. In addition, $2 billion in bonds due 2031 plunged to about 40 cents on the dollar, according to Trace data, also a record low and a sign of deep distress. These bonds are backed by collateral tied to the company’s loyalty programs and were trading at around 80 cents at the beginning of the month.

The market turmoil for JetBlue comes against a backdrop of intensifying pressure for the aviation industry, as the war in the Middle East drives up fuel costs. JetBlue is particularly exposed because of its heavy debt burden, years of losses and reliance on price-sensitive leisure travelers, leaving it with less financial flexibility than larger rivals like United Airlines Holdings Inc. or Delta Air Lines Inc. to absorb rising expenses.

JetBlue, which has a credit rating that’s in deeply speculative territory, has been closely watched by distressed-debt investors for months after budget carrier Spirit Aviation Holdings Inc. wound down and liquidated earlier this year.

United’s Chief Executive Officer Scott Kirby warned on Wednesday that some industry peers face deeper stress after Spirit’s bankruptcy, though he didn’t name specific companies. “There’s other airlines that are next up on the firing line, and I think changes are coming,” he said on the company’s earnings call. The commentary came as United cut its own full-year outlook.

JetBlue CEO Joanna Geraghty has been making efforts to reassure investors and staff. She ruled out filing for bankruptcy protection this year in an internal memo sent in April and organized a meeting in August with fixed income investors focused on the company’s liquidity and balance sheet.

The carrier has also publicly taken steps to allay concerns about its longer-term prospects. It said in July it expects to generate positive free cash flow in 2027 and earn at least $1 a share in 2028. The company also reported more than $6 billion of unencumbered assets underpinning its liquidity position.

“JetBlue remains confident in its JetForward strategy and the progress being made toward returning to sustained profitability,” a company representative said in a statement, referring to its turnaround plan. “The airline has publicly outlined its financial targets, including generating at least $1.00 in earnings per share in 2028, supported by initiatives focused on strengthening revenue, improving costs and building a more profitable business.”In May, Moody’s Ratings downgraded JetBlue’s rating one notch to Caa2 and forecast operating losses for this year and next.

JetBlue had negative free cash flow of about $389 million in the second quarter, reflecting $155 million used in operations and $234 million in capital expenditures. It said it paid an average of $4.23 per gallon for fuel in the second quarter, a 76% increase from a year earlier.