JetBlue shares jump after activist Carl Icahn reports stake and calls shares undervalued

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Carl Icahn at the 6th annual CNBC Institutional Investor Delivering Alpha Conference on Sept. 13, 2016.

Heidi Gutman | CNBC

Activist investor Carl Icahn late Monday reported a nearly 10% stake in JetBlue Airways, saying the airline stock is undervalued. Shares of JetBlue were up more than 11% on Tuesday.

Icahn amassed the stake in a series of purchases in January and February, according to regulatory filings. He has had plans to continue discussions with the company “regarding the possibility of board representation,” the filings said.

JetBlue said in a statement, “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.”

Representatives for Icahn were not immediately available to comment.

This is not Icahn’s first investment involving the airline industry. In one of his more infamous activist campaigns, the corporate raider took TWA private in the late 1980s, only to see the airline struggle and file for bankruptcy.

A JetBlue Airways plane takes off from the Fort Lauderdale-Hollywood International Airport on January 31, 2024 in Fort Lauderdale, Florida.

Joe Raedle | Getty Images

JetBlue has been cutting costs, trying to become more reliable and return to profitability after a post-Covid travel surge and a blocked merger with budget carrier Spirit Airlines. A federal judge last month ruled against a combination of the two airlines, citing reduced competition.

JetBlue had argued it needed the tie-up to help it compete against the largest American carriers. JetBlue and Spirit are appealing the judge’s ruling.

In the past 12 months, JetBlue’s stock is down more than 27% as of Monday’s close. The NYSE Arca Airline Index, which tracks the broader sector, has gained nearly 7% during the same period.

JetBlue’s new CEO, Joanna Geraghty, took the helm Monday, and the carrier has appointed a pair of airline veterans to get it back on track.

— CNBC’s John Melloy and Leslie Josephs contributed to this report.

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