JetBlue stock rallies after Carl Icahn takes nearly 10% stake in airline

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Shares of JetBlue Airways Corp. rose sharply after hours on Monday after billionaire activist investor Carl Icahn reported a 9.91% stake in the air carrier and said his investment firm would continue discussing potential board representation.

That disclosure was made in a regulatory filing on Monday. Icahn, in the filing, said Jetblue’s
JBLU,
+2.19%

stock was “undervalued and represented an attractive investment opportunity.”

The filing also said Icahn “had, and intend to continue to have, discussions with members of the issuer’s management and board of directors regarding the possibility of board representation.”

JetBlue shares jumped 16.5% in after-hours trading on Monday. The stock is down 28.9% over the past 12 months.

The move by Icahn comes after a federal judge last month blocked JetBlue’s proposed merger with Spirit Airlines Inc.
SAVE,
+1.05%
,
potentially leaving the carrier with limited options for future growth as it tries to get back to profitability. The airlines are appealing that decision.

Late last month, JetBlue said the deal with Spirit “remains in effect” but that it was considering its options under that agreement. Days earlier, JetBlue said that some conditions to make the deal happen “may not be satisfied.” Spirit, in response, said it believed there was “no basis” for ending the agreement.

Icahn disclosed the stake after Joanna Geraghty became JetBlue’s new chief executive this month, replacing Robin Hayes. The company in January said it expected first-quarter sales to fall 5% to 9%, a bit worse than analysts’ forecasts on FactSet.

“We remain intensely focused on restoring profitability, taking steps to ensure every dollar we invest is making an impact,” Geraghty said in the company’s earnings release in January.

“As part of these efforts, we are carefully evaluating deeper cuts to our controllable costs beyond our ongoing fleet modernization and structural cost programs,” she said.



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