Carl Icahn reports JetBlue stake, calls shares undervalued

Carl Icahn at the 6th Annual CNBC Institutional Investor Delivering Alpha Conference on September 13, 2016.

Heidi Gutman | CNBC

Activist investor Carl Icahn announced a nearly 10% stake in JetBlue Airways, saying airline stocks are undervalued. Shares of JetBlue rose more than 15% in extended trading.

Icahn accumulated the stake in a series of purchases in January and February, according to regulatory filings. He has had and plans to continue discussions with the company “regarding the possibility of representation on the board of directors,” records show.

JetBlue said in a statement: “We are always open to constructive dialogue with our investors as we continue to execute our plan to increase value for all of our shareholders and stakeholders.”

Representatives for Icahn were not immediately available for comment.

This is not Icahn's first investment involving the airline industry. In one of his most infamous activist campaigns, the corporate raider took TWA private in the late 1980s, only to see the airline struggle and file for bankruptcy.

JetBlue has cut costs and worked to improve operations in a bid to return to profitability after a post-Covid travel surge and a stalled merger with budget airline Spirit Airlines. A federal judge ruled last month against a merger of the two airlines, citing reduced competition.

JetBlue had argued that it needed a tie-up to help it compete with the largest U.S. carriers. JetBlue and Spirit are appealing the judge's decision.

Over the past 12 months, JetBlue's stock has fallen more than 27% as of Monday's close. The NYSE Arca Airline Index, which tracks the entire sector, is up nearly 7% over the same period.

JetBlue's new CEO Joanna Geraghty took the helm Monday, and the carrier named two airline veterans to get it back on track.

— CNBC's John Melloy and Leslie Josephs contributed to this report.

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