Carl Icahn, the renowned activist investor, has made waves in the airline industry once again. Just four days after disclosing a 9.9% stake in JetBlue Airways Corp., Icahn has secured two seats on the low-cost airline’s board. This move comes as no surprise, as Icahn had previously signaled his intention to have a say in the company’s future.
The two Icahn Enterprises executives who will join JetBlue’s board are general counsel Jesse Lynn and portfolio manager Steven Miller. JetBlue expressed their appreciation for the constructive engagement they have had with Icahn and his team, and they look forward to working together in the future.
Earlier reports had suggested that Icahn and JetBlue were in the late stages of a settlement agreement, which would prevent a proxy fight. This settlement agreement is similar to the one Icahn reached with Ohio-based utility American Electric Power Co. Inc., where he also secured two board seats.
Icahn’s decision to invest in JetBlue stems from his belief that the airline’s stock is undervalued and represents an attractive investment opportunity. In fact, in an SEC filing, Icahn indicated his intent to influence the direction of the company, rather than simply being a passive investor.
JetBlue is currently facing challenges in the form of court rulings blocking its merger with ultra-low-cost Spirit Airlines Inc. and its alliance with American Airlines Group Inc. These rulings were made due to concerns about stifling competition. However, JetBlue is appealing these decisions, showing their determination to move forward with their expansion plans.
With the addition of Lynn and Miller, JetBlue’s board will expand to 13 directors, 12 of whom are expected to be independent. This move demonstrates JetBlue’s commitment to ensuring a diverse and experienced board that can guide the company through these challenging times.
The market has responded positively to Icahn’s investment in JetBlue, with the airline’s stock soaring 17% in just one week. This is in stark contrast to the performance of the U.S. Global Jets ETF and the S&P 500 index, which only saw gains of 1.5% and a weekly loss of 0.4%, respectively. However, it’s worth noting that JetBlue shares have experienced a decline of 19% in the past 12 months, while the S&P has seen gains of about 22%.
Overall, Carl Icahn’s securing of two board seats at JetBlue is a significant development in the airline industry. It highlights the influence that activist investors can have on shaping the future of companies. With Icahn’s experience and expertise, JetBlue may be well-positioned to overcome its current challenges and emerge stronger than ever.
