Activist Investor Carl Icahn Reveals 9.91% Stake in JetBlue Airways, Calls Shares Undervalued
In a surprising move, renowned activist investor Carl Icahn has announced his acquisition of a 9.91% stake in JetBlue Airways Corp., citing the undervaluation of the airline’s shares. Icahn’s disclosure has sent shockwaves through the market, causing shares of JetBlue to soar by as much as 19% in extended New York trading.
With this significant stake, valued at approximately $204 million based on JetBlue’s closing price, Icahn now becomes the third-largest shareholder in the carrier, trailing only BlackRock and Vanguard Group. This development positions Icahn as a formidable force within the company, potentially influencing its future direction.
Icahn revealed that he has already engaged in discussions with JetBlue’s management regarding the possibility of securing representation on the board. This move signals Icahn’s intention to actively participate in shaping the airline’s strategic decisions and unlocking its true value.
JetBlue has faced numerous challenges in recent times, leading to a decline of nearly 30% in its stock price over the past year. Federal courts dealt a blow to the airline by striking down its regional alliance with American Airlines Group Inc. Furthermore, a planned $3.8 billion takeover of Spirit Airlines Inc. was deemed to violate antitrust laws. Both JetBlue and Spirit Airlines have expressed their intent to appeal the ruling.
In response to these setbacks, JetBlue has been exploring various measures to restore profitability as a stand-alone carrier. The airline has considered implementing deeper cost cuts, delaying aircraft deliveries, and reworking its flight network. By evaluating these options, JetBlue aims to enhance value for all its shareholders and stakeholders.
“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,” JetBlue stated in a press release following the disclosure of Icahn’s stake.
Interestingly, this news coincided with the appointment of Joanna Geraghty as JetBlue’s new chief executive. Geraghty assumes the role after the departure of former CEO Robin Hayes due to health reasons. With Icahn’s entry into the picture, Geraghty faces the challenge of navigating the airline through a period of potential transformation and ensuring that shareholder interests are duly considered.
In addition to his investment in JetBlue, Icahn has also made headlines by reaching an agreement to add two directors to the board of American Electric Power Co., marking his latest venture into the US power sector. This move further solidifies Icahn’s reputation as a shrewd investor with a knack for identifying undervalued assets across various industries.
As the market eagerly awaits further developments, it remains to be seen how Icahn’s involvement will shape JetBlue’s future trajectory. With his extensive experience and track record in driving change within companies, Icahn’s stake in JetBlue could potentially unlock hidden value and propel the airline towards a brighter future.