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Carl Icahn takes 9.9% of JetBluel’s capital and believes its shares are “undervalued”

Misery likes the company, and after facing steep drops in their stock prices of more than 50% each, activist investor Carl Icahn and JetBlue might need each other right now.

Icahn Enterprises today unveiled a 9.9% stake in airline JetBlue, Icahn’s first foray onto the dance floor after promising the company would “stick to our knitting” after the Short seller Hindenburg Research published a scathing critique of the company last year. Shares of Icahn Enterprises have fallen about 72.2% over the past five years and more than 60% since the Hindenburg report.

Meanwhile, JetBlue is licking its wounds since a judge blocked an estimated $3.8 billion merger with Spirit Airlines. JetBlue shares have fallen 66% over the past five years, but are up about 16% after Icahn disclosed his shares in the airline today.

Icahn revealed in today’s filing that the company acquired JetBlue shares because it believes they are “undervalued and represent an attractive investment opportunity.” Icahn Enterprises has had discussions with board members and executives regarding seeking a seat on JetBlue’s board and continues to discuss with the airline, according to the filing.

In a statement, JetBlue said it welcomed Icahn’s overtures.

“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,” the company said in an email.

However, JetBlue’s timing may not be ideal given that the company’s new CEO, Joanna Geraghty, officially took the helm today. Geraghty has served as president and chief operating officer since 2018 and previously served as executive vice president and chief human resources officer. Chief Operating Officer Warren Christie also officially started today, having served as Chief of Fleet Safety, Security and Operations.

Geraghty replaced outgoing CEO Robin Hayes, who had served in the role since February 2015. Hayes will remain on the 10-person board, chaired by Peter Boneparth. Dealing with Icahn might be old hat for him. Boneparth is a former senior advisor to a division of investment management firm The Blackstone Group and a former advisor to private equity firm Irving Capital Partners. He also chairs the board of Kohl’s, which took on a group of activists in 2021.

It was also a busy Monday for Icahn Enterprises.

Utility company American Electric Power announced today that it has entered into a nomination and nomination agreement with Icahn’s funds to appoint two new directors to the board of directors. Hunter Gary, chief executive officer of Icahn Enterprises, has joined the AEP board of directors alongside Henry Linginfelter, former executive vice president of Southern Company Gas. Gary’s appointment is subject to regulatory approvals and he will not have voting rights until the company obtains them.

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