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Carl Icahn reports JetBlue stake, calls shares undervalued

Carl Icahn at the sixth 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 the airline’s shares are undervalued. JetBlue shares rose more than 15% in extended trading.

Icahn built up 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 board representation,” according to the records.

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

Representatives for Icahn were not immediately available for comment.

This is not Icahn’s first investment in 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 declare bankruptcy.

JetBlue has been cutting costs and working to improve operations in an effort to return to profitability after a post-Covid travel surge and a blocked merger with low-cost carrier Spirit Airlines. Last month, a federal judge ruled against a combination of the two airlines, citing reduced competition.

JetBlue had argued that it needed the alliance to compete against the largest U.S. airlines. JetBlue and Spirit are appealing the judge’s ruling.

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

JetBlue’s new CEO Joanna Geraghty took the helm Monday and the airline tapped a pair of airline veterans to get it back on track.

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

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