© Reuters. JetBlue (JBLU) stock jumps as Carl Icahn reveals a 10% stake; analyst weighs in
Activist investor Carl Icahn disclosed a significant stake of almost 10% in JetBlue Airways (NASDAQ:), citing undervaluation.
JBLU surged 16% in premarket trading Tuesday.
Icahn built up this stake through multiple transactions carried out in January and February, as detailed in recent regulatory filings. These documents also reveal his intention to pursue further conversations with JetBlue’s management about the potential for board representation.
The move comes amid an important period for the low-cost airline, which has been actively implementing cost-reduction measures and enhancing its operational efficiency in a bid to achieve profitability.
Meanwhile, a federal judge recently blocked JetBlue’s merger with Spirit Airlines, voicing concerns over the potential for reduced market competition.
Deutsche Bank analysts said they are “not surprised” to see activist investors like Icahn Enterprises become involved in the airline industry.
“In our Outlook 2024 comment from December 12, 2023 – An uneven recovery favors the Big 3 for 2024 – we noted the “significant mismatch between airline asset values and airline equity values”, a characterization that we think aptly describes JetBlue,” analysts wrote.
“We believe this is largely a function of a misallocation of resources in the low-fare carrier space,” they added.
“As such, we are not surprised to see an activist such as Icahn Enterprises become involved in the US airline industry, which reinforces our outlook calling for “more to come” with respect to airline restructurings in 2024 beyond the previously announced mergers.”
