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Activist investor Carl Icahn announced a 9.91% stake in JetBlue, the American airline, calling the shares undervalued. He also said he had held discussions with management about the possibility of representation on the board of directors.
A $200 million takeover
The stake, valued at about $204 million based on the stock’s Monday night closing price, makes Icahn the airline’s third-largest shareholder, behind institutional investors BlackRock and Vanguard, according to data compiled by Bloomberg. JetBlue shares rose as much as 19% in after-hours trading last night.
Two flops in one year
The stock, however, is coming off a nearly 30% plunge over the past 12 months, after American Justice blocked two deals: a regional alliance with American Airlines and the already planned $3.8 billion acquisition of Spirit Airlines. The two companies have announced an appeal against the sentence. At the same time, JetBlue also told investors on Jan. 30 that it is evaluating measures to return to profitability as a standalone carrier, including deeper cost cuts and an overhaul of its flight network.
The reaction
“We are always open to constructive dialogue with our investors as we continue to advance our plan to increase value for all of our shareholders and stakeholders,” JetBlue said after Icahn’s stake was made public in a filing. The news came on the same day that Joanna Geraghty took over as chief executive, following the departure of Robin Hayes for health reasons.