JetBlue Airways Corporation (NASDAQ: JBLU) stock soared on Tuesday after Carl Icahn disclosed its stake in the airline company.
Billionaire investor Carl Icahn has acquired a substantial stake in JetBlue Airways, signaling confidence in the airline’s potential despite recent challenges. In a regulatory filing last night, Icahn revealed his purchase, citing the belief that JetBlue’s shares are undervalued and present a lucrative investment opportunity.
Icahn, known for his savvy investment strategies, also disclosed discussions with JetBlue’s management regarding potential board representation, indicating a desire to play a significant role in the company’s future direction.
With a stake valued at $204 million, based on the closing price of JetBlue on Monday, Icahn has become the third-largest shareholder of the airline, trailing only BlackRock and Vanguard Group, as per the compiled data of Bloomberg.
Post Icahn’s stake revelation, JetBlue purportedly issued 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.”
The disclosure of Icahn coincided with the day Joanna Geraghty, formerly the company’s president and chief operating officer, assumed her new role as the airline’s CEO, a change announced last month.
JetBlue Faces Expansion Challenges
However, JetBlue faces challenges in its expansion efforts, as evidenced by recent legal setbacks and declining share prices.
Last month, a court ruling quashed JetBlue’s proposed acquisition of the budget airline Spirit (NYSE: SAVE), valued at $3.8 billion. This agreement would have positioned JetBlue to compete more effectively against its larger competitors, such as United Airlines (UAL) and Delta (DAL).
In addition, JetBlue terminated its Northeast Alliance (NEA) partnership with American Airlines (AAL) last year following a court ruling that the merger would restrict options for budget-conscious travelers.
JetBlue disclosed last month that it had incurred a loss in the fourth quarter and projected a decrease in its current-quarter revenues between 5% and 9% due to reduced capacity.
JetBlue (NASDAQ: JBLU) Stock Performance
JBLU stock surged 21.58% to close at $7.38 on Tuesday. The traders had exchanged hands with 63,425,424 (63.42 million) shares compared to the average daily trading volume of 18.19 million.
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