JetBlue shares jump 15% as activist Carl Icahn reports stake and calls shares undervalued

JetBlue shares jump 15% as activist Carl Icahn reports stake and calls shares undervalued

Activist investor Carl Icahn has revealed a nearly 10% stake in JetBlue Airways, citing the belief that the airline’s stock is undervalued. This announcement led to a significant surge in JetBlue’s stock price, rising more than 15% in extended trading.

Icahn acquired this stake through a series of purchases made in January and February, as indicated by regulatory filings. He has expressed intentions to engage in discussions with the company regarding the possibility of securing representation on the board of directors.

JetBlue responded to Icahn’s investment by stating, “We are always open to constructive dialogue with our investors as we continue to execute our plan to enhance value for all of our shareholders and stakeholders.”

This is not the first time Icahn has been involved in the airline industry. He famously took TWA private in the late 1980s, although the airline subsequently faced financial struggles and eventually filed for bankruptcy.

JetBlue has been actively working to reduce costs and improve its operations following the challenges posed by the post-Covid travel surge and the recent blocked merger attempt with Spirit Airlines. Despite JetBlue’s arguments in favor of the merger to enhance competitiveness, a federal judge ruled against the proposed combination, citing concerns about reduced competition. JetBlue and Spirit Airlines are currently appealing this ruling.

Over the past year, JetBlue’s stock has experienced a decline of more than 27%, contrasting with the broader NYSE Arca Airline Index, which has seen a nearly 7% increase during the same period.

As JetBlue aims to navigate through these challenges, the airline has appointed a new CEO, Joanna Geraghty, and enlisted the expertise of two experienced airline veterans to help guide its strategic direction.