JetBlue’s First Woman CEO on Hedge Fund Activism: ‘I Don’t Wish It on Anybody’
Shareholder activism, often led by hedge funds, is typically a headache for public companies. But Joanna Geraghty, the CEO of JetBlue Airways Corporation and the first woman to lead the company, is staying positive amid the airline’s ongoing engagement with the activist investor Carl Icahn, who earlier this year took a 10 percent stake in the company and appointed two of his representatives to JetBlue’s board.
The airline has “had really constructive discussions” with members of Icahn’s team, said Geraghty yesterday (Sept. 19) while speaking at the Skift Global Forum 2024. “We’re very transparent, and we’re focused on returning to profitability—we’re all aligned in that regard.”
Despite JetBlue’s optimism, Geraghty expressed sympathy for similar challenges at Southwest Airlines. The rival company has been tackling a more aggressive activist campaign from Paul Singer’s Elliott Investment Management, which is reportedly looking to oust Southwest CEO Robert Jordan. “I don’t wish it on anybody because it’s hard. It can be distracting at times,” Geraghty said.
Geraghty, who was appointed top executive of JetBlue in February following a nearly 20-year tenure with the company, hasn’t had the smoothest ride this year. JetBlue stock is down 21 percent in the past six months as the company has lost money since prior to Covid-19. The airline’s struggles were exacerbated by its focus on a series of failed acquisitions and partnerships. In January, a federal judge blocked JetBlue’s proposed acquisition of Spirit Airlines, following a 2023 decision to end an alliance between JetBlue and American Airlines (AAL) in the Northeast U.S.
The airline isn’t likely to pursue any similar mergers in the future, according to Geraghty. “The challenge with the current environment that we’re in, notwithstanding the recent approval of Alaskan and Hawaiian, is it’s difficult to see how a merger can happen with this administration.”
The New York-based airline is also dealing with setbacks related to the delayed deployment of new aircraft. Around a dozen of its new Airbus planes remain grounded due to issues with their Pratt & Whitney 1100G-JM geared turbofan engines, a situation Geraghty described as “an incredibly frustrating experience.”
Despite the company’s failed acquisitions and lack of profitability, the executive is focused on “turning the corner and creating a better, stronger company for our customers and, really importantly, for our crew members.”
A central piece of Geraghty’s turnaround plan is the budget airline’s premium offerings. The airline yesterday unveiled plans to establish its first-ever airport lounges, which the CEO said is “probably the single most significant thing customers have asked for.” The JetBlue lounges will start off in New York and Boston, with the first scheduled to open at John F. Kennedy International Airport late next year followed by another at the Boston Logan International Airport.
“At the end of the day, I feel that I’m in this role for a period of time to help shepherd JetBlue through a challenging period,” said Geraghty.