JetBlue May Have Finally Been on a Good Path, but Icahn’s Investment Changes Things


Welcome back to the second part of Carl Icahn week. I wrote about what Icahn did to TWA back in the 1980s on Tuesday. Now, we can try to read the tea leaves and see what this may mean for JetBlue.

There will be no Cranky Weekly Review presented by Oakland International Airport tomorrow since we are up in Oakland for the Cranky Network Awards. We aren’t livestreaming this year, but follow along on Twitter/X tonight to see the winners announced. We will have a highlight video available as soon as our videographers can get it together.

We’ll get back to normal next week.

Things have been moving rapidly at JetBlue as of late, and that’s a mix of good and bad news. I like the moves that the airline has been making, but the airline’s future now looks rather cloudy since it’s unclear exactly how its new activist investor — Carl Icahn — plans to wield his new power.

I have recently become cautiously hopeful that JetBlue would start doing good things. CEO Robin Hayes’s tenure officially ended this week, and the changes were notable and encouraging in his wake. New CEO Joanna Geraghty may have been Robin’s number two, but she was quick to put her own stamp on the management team. She named Warren Christie to replace herself as COO. With more than 20 years at the company, that might seem like a red flag, but everyone I’ve spoken with has had nothing but positive things to say.

Then during the last quarterly earnings call, Joanna announced her plan to fix JetBlue as a standalone carrier. The alliance with American is dead, but the Spirit merger is still under appeal. Despite that, Joanna has to see the writing on the wall, and she has put together a plan that’s a little light on details but unquestionably pointing in the right direction.

Lastly, the big news dropped that Joanna had hired Marty St George to come back to the airline after a few years away at Norwegian and then most recently at LATAM. Marty left JetBlue in 2019, but all indications are that the parting of ways wasn’t exactly his idea. It was Robin’s airline, and when Joanna ascended to the President role in 2018, my assumption is there wasn’t room for all three.

By hiring Marty back, Joanna shows that there is no bad blood between them, or if there was, it won’t stop her from doing the right thing for the airline. It certainly suggests that she is her own person, and most importantly, it shows she knows what she knows, and what she doesn’t. Marty brings back a wealth of commercial knowledge that is far from Joanna’s forte. Marty also had a remarkable rapport with the front line when he was there previously, and the airline desperately needs more of that these days. Joanna knows that Marty will be able to complement her skills.

With all of this coming together, it seemed like the stars might finally align, and JetBlue would be able to make some real strides in becoming a functional company. And then Carl walked in.

Carl Icahn disclosed that he has taken just shy of a 10 percent stake in JetBlue, because he thinks the shares are undervalued. This announcement alone caused JetBlue’s shares to jump by 20 percent, because people know what happens when Icahn gets involved. This is also how the TWA adventure began, but I don’t expect this will take the same path.

With TWA, Icahn was maneuvering a very complicated situation involving needed union concessions as well as a competing leading bid under Lorenzo. None of that is what’s happening at JetBlue now. Icahn has gotten his company two board seats, and my guess is that he will try to use that presence to beat JetBlue into doing what he wants. I can’t imagine he would want to actually take the airline over.

What Icahn may very well be thinking, however, is that from a position on the board, he can push hard to make the moves that are best for shareholders in the near term. This could end up meaning he wants to sell the airline, either as a whole or broken up into spare parts. After all, those New York and Boston assets are quite valuable, and you can be sure other airlines would be interested. Same goes for Fort Lauderdale to a lesser extent.

I’ve always thought splitting the airline up and giving the northeast to American along with Florida to United would make some sense, but that idea is not possible in any way during the current administration. If Biden is re-elected, that means that nothing could happen for years, and that’s where things get squirrely.

Would Icahn try to pick apart pieces that can pass regulatory muster? He isn’t in this for a long-term strategy. If he has to wait to do a bigger deal, he might push for smaller deals to be done that weaken the airline and leave it in a worse place. If he can make money on it, then it’s not off the table.

Maybe Icahn believes in what Joanna is saying, and he thinks there’s room to buy cheap and make a lot of money by riding the wave. And maybe he just wants to have board seats to make sure the company follows through, is held accountable. That would certainly be the best possible outcome for the management team. But it’s also not likely. He doesn’t really work that way.

As of now, we don’t know where this is going, but it should make people nervous. Had this happened under the previous regime, I would say it wasn’t a bad plan. The airline was rudderless and needed some kind of kick in the pants. But now with a new management team and the beginning of a plan, it would be a shame to see that effort cut off at the knees before it even begins.

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57 comments on “JetBlue May Have Finally Been on a Good Path, but Icahn’s Investment Changes Things

  1. Make no mistake. Nothing good comes from an Icahn takeover of JetBlue. Having experienced his reign of destruction first hand at TWA, there are not enough negative adjectives to describe the man, his methods and the results of his actions. There as a special circle in hell for him. Strong letter to follow.

    1. It was awful what Carl Icahn did to TWA..he screwed up the start of my career in the travel industry..I left the Chicago reservations office in 1990 and moved to Amsterdam and worked for Air Lanka..

      1. No. At TWA three bankruptcies later and worthless stock for the rest of the holders, definitely NOTHING good happened for anyone but Carl himself. It was blood money and as I said, a special place in hell awaits.

  2. I worked for TWA in the 80s and it was sad to see what he did to TWA..I worked in the Chicago reservations office and we had big banners hung up on a wall to save Chicago to London read SAVE TWA 770/771…the flight numbers for this didn’t take carl Icahn..aka.the devil to sell off that route to one of our competitors

  3. Hot take: Icahns influence will be a good thing

    He only has two board seats and is very old, he can’t do much even if he wanted to.

    He’ll likely just pressure B6 into dropping unprofitable flights from LAX, MCO, etc which is definitely the right move.

    Jetblue management has shown distaste for their shareholders and Icahn will fix that. After all Jetblue is a for profit business.

    1. Not sure what you’ve been watching, but B6 has been in business to line the board’s pockets. It’s their personal ATM with business partners. Icahn wants that money. This involvement with Icahn investments will be the end of jetblue. Carl’s minions are running the show.

    1. The Icahn of today is more like Gorden Gekko in the film “Wall Street… Money Never Sleeps” than the original “Wall Street.” That said, a snake is a snake.

  4. I understand the concerns, but JetBlue isn’t TWA & the industry is far different then it was in 1985. Politically Biden no matter what you think of him is very likely to win a second term as the republican party on both the federal & state levels is financially bankrupt & it will only take a quick Google search to prove it.

    1. A lot of things can change in 8 months. Personally I do not like Trump… but I think it would be a very bad idea to pretend that Trump cannot win the presidency. There is a real credible chance that Trump will win in November.

      1. Not true. He doesn’t have the money that he claims, he can’t pay his lawyers, he will be in court on federal charges tied to 1/6 & politically the republican party right now is in shambles. The billionaires who donate to get their agenda past won’t touch Trump as they want Haley as she is someone they can manipulate, but she lost the SC primary. As a result, they are waiting it out before dumping cash into any campaigns.

        There is a chance that Biden & Trump are both out & that will lead to complete chaos.

        Sorry Cranky, didn’t mean to go this far down the rabbit whole, but it could led to a regulatory change in aviation & other industries.

        1. The problem is that most GOP voters still back him and the Electoral College means what little money the GOP has can be focused on a handful of states.

  5. Kudos for one of the best Crankypics yet!

    If you really wanted to dig deeply, you could do also do the “bizarro” version. But other than Joanna Geraghty as Elaine, I’m not sure who the rest would be.

    My hot take is that this is lukewarm at best. Possibility he could push some short term thinking to (finally) boost share price but there isn’t any real low hanging fruit to pick (and sell) that would pass government muster. He doesn’t have enough control to go full TWA on the place. So it might end up being much ado about nothing which is probably the best case scenario anyway.

    1. As long as the independent directors stay the course and don’t get too caught up in Icahn’s mentality, I don’t think this is as a big of a deal as everyone’s making it out to be. The only assets he could sell quickly are the European slots, and even that would be questionable from a regulatory stance: DOJ would block any sale to a member of the AA/BA JV.

      1. The board has a fiduciary responsibility to the shareholders, who have taken quite a beating with no end in sight.

        I don’t know why anyone would “stay the course”.

        Now besides Ichan, the other 2 largest shareholders are institution investors who are probably pretty tired of seeing their investment look like cold soup.

        As there is zero chance B6 is going to pay dividends, the only reason for the investors to stick around is because of the share price will go up

        1. By “stay the course” I mean back the new management and their turnaround plan. If Icahn has ideas to offer other than “carve the turkey” like he did with TWA, they should hear him out, of course. But his history suggests otherwise.

  6. @Cranky you spend a fair amount of time disparaging Mr. Icahn, but give JetBlue’s board a free pass for destroying shareholder wealth and allowing Mr. Hayes to engage in mutilpe failed ventures with its high price and never forcing his replacement. Rather than bring in a change agent, the board of directors hired Mr. Hayes’s #2. Mr. Ichan will bring some accountability to the board with his two seats.

    1. The CEO does whatever the bord of directors want. Therefore blame the board first for any poor decisions that were made in the past & are continuing to be made in the present. Then you can blame the CEO as he was the one charged with carrying out the boards directives.

    2. Not enough people are acknowledging what you accurately stated. Robin destroyed a once great company in every possible way. Labor relations fell apart, the stock price collapsed, and the once profitable company started bleeding money against the backdrop of Robin arrogantly stating how well positioned JetBlue would be compared to its competitors coming out of the pandemic.

    3. I’m not sure you know how jetblue operates. The board, for decades, has used the company as their private ATM. They own “business partners”, that suck every dollar from the company. They invest in “ventures” that board members own, or are on boards for. They balance these taking just the right amounts to keep the framework neutral. Icahn wants the whole pie. He’s not in this to “make a better company”, he’s in this to take profits from everyone. JetBlue’s new CEO has proven to be utterly weak, and placed in the role for agenda purposes. Pandering to the DEI lenders. This will be the end of this brand. Mark my words.

    4. Yes. Icahn only comes calling to companies that have languishing share prices. The Spirit merger was roundly despised by shareholders – investors, rightly or wrongly (my view – entirely rightly) saw the merger as a disaster and the share price reflected that. Further, the merger was a huge distraction in the past year or two – mgmt’s eye was totally off the ball.

      Hayes brought this on the company. This is in not in any way to defend what Icahn is, but the presence of people like him is a reality that all managements must take into account.

      1. It’s true. Don’t blame the guy taking advantage of the long depressed stock price, blame the guy who depressed it! And investors HATED that NK deal from the start.

    5. Brian W – I certainly don’t give JetBlue’s board a free pass. They have absolutely failed the airline, and there are others in the industry that have failed their airlines as well. If Icahn believes in the new management team and doesn’t plan to be an activist investor, then this may be a good bet. It’s the first time we’ve heard JetBlue saying the right thing in years. But if he is doing his usual thing, then it’ll be a real shame. Either way, yes, the board has not served the airline well at all.

  7. “This could end up meaning he wants to sell the airline, either as a whole or broken up into spare parts… I’ve always thought splitting the airline up and giving the northeast to American along with Florida to United would make some sense.” Why are we even talking about this? Is this really going to happen? Not only do I absolutely not want this to happen because JetBlue is a great airline and a fantastic brand, but just tearing apart and eliminating the 6th largest airline from the market just lets the big four jump in, further contracting the industry. I would hope the government would sue to stop Icahn from doing this. Yuck.

    1. Exactly. Defeats the whole purpose of the denial of the JetBlue Spirit merger i,e competing with the big four with a greater scope of service.

    2. I’m not sure what you mean by “giving” routes to AA and UA.

      With the exception of JFK and LGA , where B6 is not an issue, anyone can fly from anywhere to anywhere any time they want.

      If AA and UA thought there was money to be made on any of these routes, they would already be there.

      JetBlue is a dead airline flying. It’s too fancy to be Spirit. It”s not fancy enough to be The Big Three. It’s costs are too high to complete with Frontier and Allegiant.

      It’s only because of fleet issues from Boeing that Southwest hasn’t expanded in B6 territory.

      The arrival of the A321XLR is going to allow UA and AA to box B6 in to Europe, flooding their routes with seats in the summer and keeping them from making enough to get through the off season.

      Many of their A320’s are ancient, so nobody wants them for their fleet.

      Ichan is the polar opposite of Warren Buffet. He NEVER buys “under valued” companies so he can straighten them out and then run them properly.

      Why do you think the stock price shot up?

      It wasn’t because Wall Street thought suddenly Ichan was going to become an airline guy.

      1. Where do you get the idea that the Big 3 (or the Big Domestic Four) are “fancy”? JetBlue offers a more comfortable passenger experience, the problem is that they tend to offer that experience late. And they have a plan to address that.

        And if the network carriers wanted to flood the European market with seats, they could do that with the fleets they have now. The 321XLR is all about hub bypass, not additional seats in existing markets. I have doubts about JetBlue’s European strategy too, but other airlines getting the 321XLR isn’t the problem.

  8. Assuming this DOJ stays in place, will the AS/HA merger be scuttled like the B6/NK due to overlap? If this is the case then a rebound merger between AS/B6 could be a reality.

    1. If the DOJ stops the AS/HA merger, there’s no chance it will allow AS/B6 or anything else involving any of the major carriers.

      (Also I don’t get why so many people seem to have a weird fetish for airline mergers)

    2. FWIW, AS claims that the legal rationale for killing B6/NK actually strengthens their case by establishing precedent for tests that they meet that B6/NK did not.

  9. As much as some wish to see JetBlue carved up to satisfy the strategic failures of American and/or United, the DOJ is not likely to approve a transaction that involves selling off B6 in pieces to any of the big 4 unless B6 completely shuts down and is being liquidated.
    As long as B6 serves any role of providing a check on pricing for the big 4, the DOJ wants to see B6 remain intact. The whole reason the NEA was denied was because B6 does serve a role in checking the big 3’s pricing in NYC – the DOJ proved it – and removing one of those big 3 players and aligning them w/ B6 will eliminate competition. B6 and NK compete with each other in FLL and in turn keep AA at MIA in check.
    With the B6/NK merger proposal, the DOJ successfully argued that B6 was going to eliminate a lower cost and lower fare carrier which would harm competition.
    Carving up B6 would still run afoul of both of those principles which Icahn or any other corporate raider cannot overcome. The fact that his argument would be to maximize his or shareholder value will further solidify the DOJ’s objections that consumers get hurt in pursuit of pro-investor strategies.
    B6 has a decent balance sheet and Joanne has a decent plan to fix some of the things that should have been fixed at B6 years ago.
    Icahn will put pressure on the board but he might not be able to do near as much as some fear or think he could do.

    1. Is the current DOJ an outlier in the recent decades of airline mergers? If this DOJ was on the job when DL/NW, UA/CO, AA/US merged would those have passed muster?

      If the DOJ changes in Jan 2025 would that change your opinion?

      1. as much as people want to see the DOJ as political, it actually uses fairly consistent standards for mergers and that was true for all of the megamergers that now make up the big 4. DL/NW was an almost entirely end-on-end merger which means there was little overlap and also had no need for divestitures. UA/CO had little overlap other than concentration in major slot-controlled markets. WN/FL removed a significant amount of competition and changed the notion that low cost carriers should be given a pass on anti-competition standards because WN went on to raise fares in BWI, MKE and elsewhere where the two competed before the merger. AA/US was in the position of being the last of the big 4 megamergers.
        Again, the reason the DOJ acted in both B6 transactions was because of factors that the DOJ would enforce for any other 2 carriers – the US does not allow ATI and JVs between two US domestic carriers – and between any carrier that attempts to acquire a carrier in a lower fare category. all of the legacy carriers merged w/ other legacy carriers and WN/FL were both LCCs. by attempting to merge with an ultra low cost carrier, B6 was removing a lower cost competitor.

        as for those that find they are in agreement w/ me, bravo but I haven’t changed my opinions. We are just on the same page in believing Joanne can and will do what needed to be done and Icahn can’t do the damage that some people think he will do. I could be proven wrong on both counts.

        1. “as much as people want to see the DOJ as political, it actually uses fairly consistent standards for mergers”

          That is absolutely ignorant rubbish. You obviously don’t follow politics or antitrust issues. The DOJ and FTC jointly issued brand new merger guidelines on December 18th, 2023 so I don’t know how you think those rules were in effect during the Obama administration? Everything is political and Biden’s appointment of a well-known “Neo-Brandeisian” ideologue to head the DOJ’s Antitrust Division was intended to signal a changing of the guard in federal antitrust enforcement. Johnathan Kanter and his ideological comrade at arms at FTC, Lina Khan, (also Biden appointee) have been waging a scorched earth jihad against corporate mergers since they assumed their offices. These two picks cost Biden more political capital than the rest of his administration combined. There’s not a day that goes by that the WSJ or CNBC doesn’t pen a hit piece screeching about these two.

          There’s absolutely nothing in the Clayton Act, Sherman Act or any other antitrust law that preferences a ULCC over a ULC. There’s nothing that discourages a competitor from charging higher prices for a higher quality product such as JetBlue’s product offering vs. Spirit’s. Antitrust law does not dictate business models to market participants provided they are not rigging prices, bids, or engaging in predatory pricing etc. Predatory pricing is an Antitrust case that could be levied against the ULCCs like Spirit and Frontier however. In FDR’s day routinely selling a product below cost would land you in hot water with the Feds. All of the stuff you hear about low price being preferenced by law is case law only and supply-side Chicago School/Consumer Welfare Standard/ Borkian precedent from the 1980’s. Ironically the Neo-Brandeisians came to power vowing to bury the Consumer Welfare Standard (they believed it a perversion of Antitrust law) and now they have unscrupulously enshrined it deeper into case law by invoking it against B6/NK.

          You’re entitled to your opinion TD, but the facts are clear, this case and this decision were 1000% political. I also suspect either money or favors changed hands here in order for a Reagan appointee judge to render this decision. Smells rotten. Two tiny birds that had been a thorn in the side of the Big Three are now deeply wounded with one stone.

      2. The current DoJ was largely on the job when UA/AA was announced.

        Their arguments against the merger were incredibly poor and they let it go with hefty concessions.

    2. Wow Tim! Your answers as if lately I been agreeing with more and more. Kudos! This one is. O exception. I agree 1000%, I think Ichan will hear out Joanna’s strategy and make sure it executes maybe he might insight a few tweaks. Ichan has a bad history with twa but 1) it was a very different industry back then, twa was in a different spot. Twa didn’t adapt, JetBlue just needs to stick to its strengths that have proven to work in the past instead got side tracked under Hayes. 2) ichan in the past decade and a half has actually done some good turnarounds in some recent investments. Ie apple, Herbalife, family dollar, etc have all worked stock went up and he cashed out. This is his new MO. I surmise the same for JetBlue. Joanna is smart and knows how to make a profitable move. I heard from a few employers that they expect to be profitable by Q2.

    3. I can’t believe it – I’m agreeing with Tim Dunn? That’s incredible!

      Saw a video on YouTube this morning from “How Money Works” on why maximizing shareholder value vs playing the long game is destructive for everyone. The case example was Jack Welch. He worked his way up the GE corporate latter & when he reached the CEO position he dismantled everything that GE stood for & focused on financial services & NBC.

      Today GE is a shell of what it once was & it’s a corporate lessen that’s not being learned.

  10. I think that other major shareholders as well as management will be somewhat wary of Carl Icahn both due to his history, but also because that’s just the modern reality of either owning shares or managing a publicly owned company. Major shareholders are in it to benefit their investment strategy and reasons that may or may not align with each others’ or the airlines’ best interest, and they’re all aware of that now.

  11. Silver lining: drop the appeal to appease Icahn. It’s the perfect excuse, because shareholders hate the merger.

    The appeal is a distraction and god forbid it actually succeeds, even with Marty St George there’s not remotely enough talent at JetBlue to make work.

  12. Does it really matter what the ultimate fate of JetBlue turns out to be? They’re basically a niche airline in most of the country other than a few select markets.

      1. Since the Earth itself is now apparently in an environmental death spiral, I guess neither you nor I will be around to experience that event.

        My point is there seems to be an awful lot of hand wringing about about how much power or influence Icahn is going to wield and what effect that might have on a middle of the pack airline. We’ll all get along just fine without JetBlue (if that actually happens) just like we we’ve gotten along without TWA for the past 30+ years.

  13. I Have never understood why airline routes are in any way the property of the airline that Flys that slot.Can someone enlighten me?

    1. Slots aren’t generally tied to a specific route. There are some exceptions at Washington National, as Congress has passed bills over the years creating additional exceptions to the perimeter rule that tie specific slots to specific routes.

    2. Slots and routes are different things. Routes are intrinsically valueless because any airline can fly any route since deregulation. Slots control capacity at congested airports and are valuable because an airline can’t serve a slotted airport if it does not have slots.

  14. I think we’re coming to the gradual realization that scheduled air service is nothing more than a commodity that heavily leans on public assets and is no different than Amtrak or your local city transit system, power utilities, and telecommunications. We fool ourselves into thinking that one airline is better than the other, but essentially the differences are on the margins and they all provide the same bread and butter services.

    That commodity realization is that economies of scale matters. Having a large nationwide, perhaps worldwide network, matters. The big 4 are succeeding mostly because of scale while the smaller players lack scale and profitability.

    If jet blue wants to survive it needs a doj that’ll allow them to merge. A better fit would be one with complimentary networks, such as AA or Alaska. Perhaps joining OW at the very least.

  15. Someone have icahn contact me to do more changes to the genomics research industry to find cures big deals than GRAIL.

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