Shares of JetBlue Airways Corp significantly increased by approximately 16 percent during Monday's extended trading on Nasdaq. This occured after renowned activist investor Carl Icahn revealed that he owns roughly a 10 percent stake in the aviation company.
The U.S. Securities And Exchange Commission filing reported that Icahn owns an estimated 33.62 million shares in JetBlue equating to a 9.91 percent stake. As of the end of January 2024, JetBlue had approximately 339.28 million common stock shares outstanding.
Icahn's companies purchased these substantial shares in JetBlue, spending a combined total of approximately $119.75 million. The billionaire investor explained that he bought the shares perceiving them as undervalued and a lucrative investment opportunity. Icahn noted in the filing, he has had significant discussions with JetBlue's management and board of directors. He also expressed interest in pursuing these conversations regarding potential board representation.
Meanwhile, JetBlue is grappling with some financial challenges this year. In late January, the company reported a net loss in the fourth quarter, in contrast to the profit recorded in the previous year. It also predicted decreased revenues and capacity for its first quarter and 2024 fiscal year.
JetBlue predicts a 5-9 percent revenue decline in the first quarter year-over-year, along with a 3-6 percent drop in capacity, as measured in Available Seat Miles. Furthermore, the company's 2024 fiscal revenue target is expected to remain flat, while the capacity is projected to marginally decrease.
Ursula Hurley, JetBlue's chief financial officer, explained that the company is meticulously investigating further cuts to its controllable costs, in addition to its ongoing fleet modernisation and structural cost programs.
In its fourth quarter, the airline reported a net loss of $104 million, a stark contrast to the $24 million profit of yesteryears. Despite an increase in capacity by 3.3 percent, operating revenue dipped by 3.7 percent year-over-year, recording a total of $2.3 billion.
An additional incident reported by the Federal Aviation Administration (FAA) last week revealed two of JetBlue's planes collided at Boston's Logan International Airport. Thankfully, no injuries were reported among passengers or crew members.
Adding to its challenges, in mid-January, the U.S. District Court for the District of Massachusetts blocked JetBlue's proposed $3.8 billion acquisition of Spirit Airlines Inc. This decision arose due to competition concerns. JetBlue had previously struck a deal in July 2022 to acquire Spirit Airlines for an equity value of $3.8 billion. Following this, in late January, JetBlue informed Spirit that the merger agreement could be dissolvable after January 28, given unsatisfied conditions.
