Carl Icahn Invests in JetBlue and Gets Board Seat, But Who is he and Why So popular?

NEW YORK- Earlier this year, JetBlue Airways (B6) announced two independent directors, which are part of the Carl Icahn entity. He now owns a 10% stake in a New York-based carrier, CNBC reported. But who is he and why has he been news for months?

In today’s article, we will unveil everything about Carl Icahn, how he became a billionaire, and his relationship with the airline industry. Self-made billionaire Carl Icahn also has a HBO documentary The Restless Billionaire, which I watch before writing this article.

Carl Icahn Boards JetBlue

JetBlue in February 2024 announced that they have partnered with Carl Icahn-owned Icahn Enterprises. Jesse Lynn, general counsel of Icahn Enterprises, and Steven Miller, the portfolio manager of Icahn Capital are named the two independent directors and will join JetBlue’s board.

With the addition of two board members, JetBlue now has 13 directors. They are:

1. B. Ben Baldanza
2. Peter Boneparth (Chairperson of the Board)
3. Monte Ford
4. Joanna Geraghty (CEO of JetBlue)
5. Ellen Jewett
6. Robert Leduc
7. Jesse Lynn (New)
8. Teri P. McClure
9. Steven Miller (New)
10. Nik Mittal
11. Sarah Robb O’Hagan
12. Vivek Sharma
13. Thomas Winkelmann

Except for CEO Joanna Geraghty, all 12 are independent directors. According to the official website, Jesse Lynn and Steven Miller will oversee the Audit Committee, one of the five crucial airline committees, others are Airline Safety, Compensation, Governance, and Nominating, ESG, Finance, and Technology Committee.

Following the induction of two directors, the CEO Joanna Geraghty stated,

While the Billionaire Investor Carl C. Icahn commented,

Since 2018, the New York-based carrier has added 8 new directors, which is almost a comprehensive makeover. If we look at the revenue, last year it made $9.2 billion, which is almost twice as Spirit Airlines (NK), the low-cost rival that JetBlue attempted to acquire.

Well, now the question arises what will Carl Icahn bring to the JetBlue board which is doing not so well in Wall Street? Same day in 2019, JetBlue share was traded at $18.91 but today (July 18, 2024) it is at $6.02, which is almost 68% down, which Carl thinks is undervalued.

To answer this question we will need to head back to the start of Carl Icahn’s journey and then his not-so-good experience in the airline industry and finally after passing through his successes and failures to our question. So buckle up and get ready for takeoff.

Journey of Restless Billionaire

Carl Icahn is a single child and his parents were Jewish. He was born and brought up in Brooklyn, NYC. He went to Princeton University, an Ivy League college to study philosophy. Later he enrolled in the New York University School of Medicine but dropped out to join the US military.

He revealed in his documentary that he hated the military and never liked to be disciplined. Fast forward to his career, he became a stockbroker and later bought a seat on the New York Stock Exchange and continued risk arbitrage and options trading.

He soon realized that it was a very risky business and he then became one of the first activist investors. It is defined as:

An activist investor is an individual or institutional investor that seeks to acquire a controlling interest in a target company by gaining seats on the company’s board of directors.

Firstly, in 1978 he invested heavily, to gain a controlling stake in Tappan and sold it to Electrolux. In 1979, he acquired Bayswater Realty & Capital Corporation and later ACF Industries.

Well, it was time to go big and airline is a sector that brings name and fame. Without any previous experience in working with the airline industry, Carl Icahn acquired a stake in TWA in 1985. Let’s understand his TWA story.

Carl Icahn TWA Story

In his HBO documentary, Carl Icahn revealed much more about the Trans World Airlines (TWA) acquisition. But we will see some important highlights that will help us understand why he invested in JetBlue after almost 40 years (In the same industry).

TWA was founded by one of the greatest aviators Howard Huges. He was also an aerospace engineer, business magnate, investor, pilot, and whatnot.

So Carl Icahn said in the documentary that he was approached by the board to acquire around 50% stake and become director of TWA. However, the Flight attendant union was not happy with Carl Icahn and they protested and struck due to which the airline which was already struggling almost went into an impaired state.

But Carl managed to make some reforms and tried to revive the airline, however, there’s a saying in aviation by Richard Branson, founder of Virgin Group which goes like this,

So there Great Carl Icahn failed to revitalize the airline and he sold TWA’s assets in 1991 to retrieve his invested money and next year filled for bankruptcy. The most notable asset was London routes, which he sold to American Airlines (AA) for $445 million.

Icahn: A Corporate Raider or Activist Investor

Following this he was called the ‘Corporate Raider.’

Corporate raider refers to the practice of obtaining a controlling share of a corporation, then proceeding to sell off that company’s assets or force a merger with another company.

Since then there has been a long debate, about whether Carl Icahn is an Activist Investor who reforms companies and works for stakeholders or a Corporate Raider who destroys them for earning profits.

Well, there is no clear winner to it and I think he is both. He said in the documentary that he is trying to do what’s best for the company and its shareholders whether it’s reformation or sale.

Well, TWA did have its last breaths after Carl left the company but it ultimately merged into American in 2001.

He also tried to acquire struggling Pan Am in 1990, which was the world’s first airline that flew internationally and was unofficially the flag carrier of the United States for $375 million but failed. He again tried to do that in 1998 for $43 million but his plan was not feasible. Ultimately, it was never revived and  Guilford Transportation Industries, a railroad holding company bought the Pan Am name and logo for an undisclosed amount.

Now let’s go back to our question,

Why Carl Icahn Bought JetBlue Shares?

According to some speculation and critics reports, the Icahn might want to control what JetBlue is doing. He can buy the carrier but there are slim chances to it. He got 2 out of 13 seats, so he can have control of the decision of the board and make himself and other stakeholders more money.

JetBlue investment is different from that of TWA because JetBlue is starting to do well under the leadership of a new CEO, who has been with the airline for 20 years. She has made some remarkable changes in management including hiring back Marty St George and making Warren Christie a new CCO.

But when there is Carl things can not be in the control of the CEO or others but that is just a speculation. However, there is the possibility that Carl forces the board to sell less performing or non-performing assets to rival carriers such as American or United. But under the Biden Administration, this is very difficult, or it is a no-go-deal.

But what if Donald Trump, the friend of Carl Icahn comes back to power, then it possible to sell JetBlue as a whole or in parts. Carl Icahn served as an advisor to Trump for seven months in 2017, when he was president.

Well, he just wants to make money from underperforming shares, but that is not the Icahn way, he is now 88 years old and based in Florida and he might not want to get into court cases and other stressful things.

But JetBlue’s management may perform well under him. He will keep them in check and have a positive influence on the carrier or it can go the other way. However, JetBlue is an amazing carrier and it is making some good strides.

One more thing, Carl Icahn has also made notable investments in Lyft, PayPal, Apple, Netflix, Herbalife Nutrition, and many others.

JetBlue Mini Mint First Class

JetBlue plans to introduce a domestic first-class cabin called “Mini Mint” across its Airbus fleet starting in 2026. This move aims to address persistent losses and the blocked merger with Spirit Airlines.

Industry sources told Live and Let’s Fly that JetBlue will likely use the Collins Aerospace MiQ seat for its new premium cabins. The MiQ seat features a four-way adjustable headrest, up to 10 inches of recline, a large bi-fold table, an adjustable aisle armrest, storage options, and in-flight entertainment integration.

JetBlue’s planned aircraft configurations include:

1. A220: 143 seats (8 Mini Mint, 135 economy)
2. A320: 162 seats (12 Mini Mint, 150 economy)
3. A321ceo: 198 seats (12 Mini Mint, 186 economy)
4. A321neo: 200 seats (12 Mini Mint, 188 economy)

The MiQ seat is widely used in the airline industry as a premium economy seat by major carriers like American Airlines, Delta Air Lines, and United Airlines. It also serves as a business class seat for Aeromexico and Turkish Airlines and as a domestic first-class seat for American and Hawaiian Airlines.

This strategic move by JetBlue represents a significant shift in its cabin offerings, potentially positioning the airline to compete more effectively in the premium travel market, especially after Carl Icahn bought the stake.

At last, to conclude, JetBlue has to do well, otherwise, Carl Icahn will not spare the airline, which will not good be for customers, nor for its senior management and employees. But this is just a speculation and opinion from various reports. We as a company have no say in it, so make your decision carefully.

Stay tuned with us. Further, follow us on social media for the latest updates.

Also Read: US Airlines, Including American, United, Delta, and Southwest, want you to Dress Properly – Aviation A2Z

Join us on Telegram Group for the Latest Aviation Updates. Subsequently, follow us on Google News.

The post Carl Icahn Invests in JetBlue and Gets Board Seat, But Who is he and Why So popular? appeared first on Aviation A2Z.