Shares of JetBlue Airways Corp. rose. sharply after hours on Monday after billionaire activist investor Carl Icahn announced a 9.91% stake in the air carrier and said his investment firm would continue to discuss potential representation on the board.
This disclosure was made in a regulatory filing on Monday. In the filing, Jetblue's JBLU, Icahn said,
The stock was “undervalued and represents an attractive investment opportunity.”
The filing also said that Icahn “has had, and intends to continue to have, discussions with members of the issuer’s management and the Board of Directors regarding the possibility of representation on the Board of Directors.”
JetBlue shares jumped 16.3% in after-hours trading Monday. The stock is down 28.9% in the past 12 months.
The move by Icahn comes after a federal judge last month blocked JetBlue's proposed merger with Spirit Airlines Inc.
The carrier will likely be left with limited options for future growth as it tries to return to profitability. The airlines are appealing this decision.
Late last month, JetBlue said the deal with Spirit “remains active” but that it was considering its options under that agreement. Days earlier, JetBlue said that some conditions for completing the deal “may not be met.” In response, Spirit said it believed there was “no basis” to terminate the agreement.
Icahn revealed the stake after Joanna Geraghty became JetBlue's new CEO this month, replacing Robin Hayes. The company said in January that it expects first-quarter sales to decline 5% to 9%, slightly worse than analysts at FactSet expected.
“We are intensely focused on restoring profitability and taking steps to ensure every dollar we invest makes an impact,” Geraghty said in the company's January earnings release.
“As part of these efforts, we are carefully evaluating deeper reductions in our manageable costs beyond ongoing fleet modernization and structural cost programs,” she said.
