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KEY TAKEAWAYS
- Activist investor Carl Icahn disclosed a 9.91% stake in JetBlue Airways, noting in a filing that he believed the shares to be undervalued.
- JetBlue swung to a loss last quarter, and the airline’s proposed merger with Spirit Airlines was blocked by a judge last month.
- Shares in the airline were more than 18% higher Tuesday afternoon.
Shares of JetBlue Airways (JBLU) soared more than 18% Tuesday following news that activist investor Carl Icahn had acquired a 9.91% stake in the carrier.
Icahn said in a regulatory filing late Monday that he bought the shares “in the belief that they were undervalued and represented an attractive investment opportunity.”
The billionaire said he is also in talks with the carrier’s management about the possibility of board representation.
Icahn’s stake—valued at $204 million based on JetBlue’s Monday close—makes Icahn the airline’s third-largest shareholder behind BlackRock and Vanguard Group, according to data compiled by Bloomberg.
“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 reportedly said in a statement after Icahn’s stake was disclosed.
The Icahn filing came the same day Joanna Geraghty, previously the company’s president and chief operating officer, took over as the airline’s chief executive officer. Her new role was announced last month.
The airline’s attempts to expand have faced pushback from federal courts, and dragged its shares down over the past year.
Last month, a judge blocked JetBlue’s $3.8 billion acquisition of discount airline Spirit (SAVE), a deal that would have helped the carrier scale up to compete with larger rivals such as United Airlines (UAL) and Delta (DAL).
JetBlue had ended its Northeast Alliance (NEA) partnership with American Airlines (AAL) last year after a court ruled the merger would have limited options for budget-conscious travellers.
JetBlue last month announced it swung to a fourth-quarter loss and said it sees its current-quarter revenues falling between 5% and 9% as capacity falls.
JetBlue shares were up 18.6% at $7.20 at around 2:15 p.m. ET, after moving as high as $7.34 during the session.