Activist Investor Carl Icahn Slashes JetBlue Stake

Activist Investor Carl Icahn Slashes JetBlue Stake

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JetBlue Airways has been in a rough financial situation for quite some time. The airline put a lot of money and effort into a failed takeover of Spirit Airlines, and JetBlue has in general had an issue with its business model.

The airline offers consumers more (more legroom, free Wi-Fi, seat back entertainment, drinks and snacks, etc.), without being able to command a revenue premium. Furthermore, JetBlue hasn’t been able to capitalize on its frequent flyer program and long haul flying as much as the “big three” carriers, which is where most of their profits come from.

There’s now an interesting update when it comes to JetBlue’s most prominent investor.

Icahn cuts JetBlue stake in half

In February 2024, it was disclosed that activist investor Carl Icahn purchased a 9.91% stake in JetBlue. He called the shares undervalued, and was pursuing representation on the board.

I think one important thing to note is that Icahn isn’t just your average airline investor, but he’s quite a controversial figure, dating back decades. In the late 1980s, he took over TWA in a leveraged buyout. However, he then turned around and basically screwed over the airline, selling off many of the carrier’s assets, before leaving the airline with a significant amount of debt.

So when Icahn invested in JetBlue, people were skeptical. Did he have similar plans for JetBlue as he had for TWA, or did he actually believe in the airline, and want it to thrive independently?

Well, there’s now an interesting update. As flagged by @xJonNYC, regulatory filings show that Icahn has roughly halved his ownership stake in JetBlue, as he has gone from a nearly 10% stake, to a roughly 5% stake in the airline.

For what it’s worth, on the day that it was announced that Icahn purchased a stake in JetBlue, the carrier’s stock price was $6.07, though a day later it climbed all the way up to $7.38. Meanwhile yesterday, when it was revealed that Icahn had sold so many shares in the airline, the stock closed at $6.09. So JetBlue’s stock is basically at the same level as it was pre-Icahn.

Icahn has already cut his JetBlue stake in half

What was Icahn’s play for JetBlue?

One certainly has to wonder why Icahn took such a big stake in JetBlue, only to sell it months later, especially when claiming that JetBlue was undervalued, and wanting representation on the board:

  • Was it all a bluff, and was he just looking to make a quick buck by driving up JetBlue’s share price?
  • Has he decided in recent weeks that JetBlue doesn’t have as much potential as he initially thought, so he decided it wasn’t worth his while?
  • Was he not getting the influence he was hoping he could get at the airline, and therefore lost interest?

JetBlue has quite the uphill battle in returning to profitability, though I absolutely think the airline can be saved with some revenue optimization and a tweak in customer experience. While Icahn’s investment in JetBlue certainly helped JetBlue’s stock price (at least briefly), I’m not sure he would’ve necessarily done much to change JetBlue’s trajectory.

I wonder why Icahn had a change of heart

Bottom line

Activist airline investor Carl Icahn bought a 10% stake in JetBlue a few months ago, and has now sold roughly half of his shares. At the time, he claimed the airline had a lot of potential and fought for representation on the board, but clearly his plans have changed. What we don’t know is why…

What do you make of Icahn selling roughly half of his JetBlue shares?

Conversations (11)
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  1. TravelinWilly Diamond

    “Activist Investor Carl…”

    LOL!

    You spelled “asshole” as “a-c-t-i-v-i-s-t!”

    LOL!

  2. Maximus Guest

    I suspect he needed to sell B6 SGH area in order to cover his short of GME.

  3. JD Guest

    This is an incorrect assessment of the SEC Filings. Icahn has not changed his stake in JetBlue. That's the issue with what you read on the internet...do your own research. In addition it's not responsible to repost this on another blog without doing some fact checking...

  4. Indian peeing scorpian Guest

    Grave Robber!

  5. John Guest

    What is the proof he has sold shares?

  6. Exit Row Seat Guest

    IIRC, Icahn had two "non-voting" observers on the JetBlue board.
    This mitigated any influence he had:

    "...will join the airline’s board of directors. Lynn and Miller will serve as non-voting observers to the board...."

    As per JetBlue press release dated 02/16/2024

  7. Tim Dunn Diamond

    first, multiple investment sites picked up the news from regulatory filings that also involved Icahn's share changes. If your news source is someone that simply reads other sites, you are getting your news the wrong way.

    second, all of the people that were convinced that Icahn would destroy JBLU won't let go of their narrative but he never had a large enough stake or boardroom presence to effect major change on his own.

    third, he...

    first, multiple investment sites picked up the news from regulatory filings that also involved Icahn's share changes. If your news source is someone that simply reads other sites, you are getting your news the wrong way.

    second, all of the people that were convinced that Icahn would destroy JBLU won't let go of their narrative but he never had a large enough stake or boardroom presence to effect major change on his own.

    third, he is an investor. He will invest his money where he sees the greatest opportunity. Half of the original JBLU investment can make more money elsewhere. He is interested in making money first and foremost.

    finally, JBLU is making meaningful changes to management and strategy on its own. He has undoubtedly heard mgmt presentations and cannot do any more and cannot at this point prove that their strategies won't deliver the turnaround the company needs.

    JBLU has a very long ways to go for a turnaround but Icahn is not and will not be a significant factor in their decisions. If JBLU demonstrates even a little bit of success, Icahn will make lots of money

  8. George Romey Guest

    I agree his departure for whatever reason is a good thing. His "skill" is financially raping a company for his own benefit and when the entity crashes and burns he's well gone with his millions.

  9. Jas Guest

    "Activist investor"? More like corporate raider. What he did to TWA was disgusting. I saw an interview he did with Maria Bartiromo around the time he was working on TWA and not once did she or he say anything about the workers of that airline or how they would be impacted by his destroying of it.

  10. SMR Guest

    B6 will figure it out.. Every airline out there has been through growing pains and at-least B6 still has a vey good balance sheet. Good riddance...No airline needs CArl or his money. GTFO.

    Also..B6 operations have improved greatly in just 90 days.

  11. Jim Guest

    History hath shown that Icahn getting involved is bad news for everyone not named Icahn. So his departure can only be interpreted as good news for JetBlue, its passengers, its employees, and anyone else who uses or interacts with aeroplanes.

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TravelinWilly Diamond

“Activist Investor Carl…” LOL! You spelled “asshole” as “a-c-t-i-v-i-s-t!” LOL!

2
Jas Guest

"Activist investor"? More like corporate raider. What he did to TWA was disgusting. I saw an interview he did with Maria Bartiromo around the time he was working on TWA and not once did she or he say anything about the workers of that airline or how they would be impacted by his destroying of it.

2
Jim Guest

History hath shown that Icahn getting involved is bad news for everyone not named Icahn. So his departure can only be interpreted as good news for JetBlue, its passengers, its employees, and anyone else who uses or interacts with aeroplanes.

1
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