JetBlue (JBLU) Stake Bought by Activist Investor Carl Icahn

Shares of JetBlue Airways JBLU gained in double digits in after market trading on Feb 12. The upside followed a stake-related disclosure by activist investor Carl Icahn. Per a SEC filing, Icahn currently has a 9.91% stake in JetBlue.

Justifying his decision to buy a stake in the low-cost carrier, Icahn said that he believed JBLU shares were undervalued and represented an "attractive investment opportunity". Icahn intends to continue discussing with management and board of directors regarding the possibility of representation in the airline's board.

Interestingly, the development comes immediately after Joanna Geraghty assumed the responsibilities of chief executive officer at JetBlue. We remind investors that Geraghty, prior to her elevation, served as JBLU's president and chief operating officer. She succeeded Robin Hayes, who stepped down after leading the company for almost nine years. Notably, Geraghty is the first woman to run a major airline in the United States.

The upward movement in JBLU shares mark a welcome relief as the stock had been struggling ever since its impending $3.8 billion acquisition of Spirit Airlines SAVE was blocked by a federal judge. In the past six months, shares of JBLU have lost 8.3% compared with the Zacks Airline industry's 1.1% decline.

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The judge attributed the decision to competition concerns. The judge believed that the merger, on taking effect, would drive up fares. Both JBLU and SAVE disagreed with the verdict and appealed against it. An U.S. court will hear the appeal pertaining to the blocked merger in June.

Zacks Rank & Key Picks

JBLU currently carries a Zacks Rank #3 (Hold).  

Investors interested in the same industry may consider SkyWest SKYW and American Airlines AAL. SkyWest currently sports a Zacks Rank #1 (Strong Buy), while AAL carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

SkyWest is based in St. George, UT. Its fleet modernization efforts are commendable. By 2026-end, SkyWest is likely to operate a total of 258 E175 aircraft. We are impressed by SKYW's efforts to reward its shareholders through buybacks. Upbeat passenger volumes also bode well.

Over the past 60 days, the Zacks Consensus Estimate for SKYW's 2024 earnings has been revised upward by 11.2%. SkyWest shares have gained 31.7% over the past three months.

American Airlines is witnessing improvements driven by an encouraging air-travel-demand scenario, particularly on the domestic front. The carrier's debt-reduction efforts are impressive as well. Management aims to reduce its debt by $15 billion by 2025-end.

The Zacks Consensus Estimate for AAL's 2024 earnings has been revised 4.19% upward over the past 60 days. AAL surpassed the Zacks Consensus Estimate for earnings in each of the past four quarters, the average beat being 23.83%.

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