JetBlue’s First CEO Joanna Geraghty Talks Hedge Fund Activism

Shareholder activism, often led by hedge funds, is typically a sore spot for public companies. But Joanna Geraghty, CEO of JetBlue Airways Corporation and the company’s first female CEO, remains positive amid the airline’s ongoing dealings with activist investor Carl Icahn, who earlier this year acquired a 10 percent stake in the company and appointed two of his own representatives to JetBlue’s board.

The airline has “had really constructive discussions” with members of Icahn’s team, Geraghty said yesterday (September 19) during a speech at the Skift Global Forum 2024. “We are very transparent and focused on returning to profitability — we are all aligned on that.”

Despite JetBlue’s optimism, Geraghty expressed sympathy for similar challenges at Southwest Airlines. The rival company is facing a more aggressive activist campaign from Paul Singer’s Elliott Investment Management that reportedly wants to oust Southwest CEO Robert Jordan. “I wouldn’t wish it on anyone, because it’s hard. Sometimes it can be distracting,” Geraghty said.

Geraghty, who was named JetBlue’s CEO in February after nearly 20 years at the company, hasn’t had the easiest ride this year. JetBlue shares have fallen 21 percent over the past six months as the company has shed money since before COVID-19. The airline’s woes have been exacerbated by a focus on a series of failed acquisitions and partnerships. In January, a federal judge blocked JetBlue’s proposed takeover of Spirit Airlines after a 2023 decision to end an alliance between JetBlue and American Airlines (AAL) in the Northeast.

According to Geraghty, the airline is unlikely to pursue similar mergers in the future. “The challenge in the current environment that we’re in, despite the recent approval of Alaskan and Hawaiian, is that it’s hard to see how a merger could happen under this administration.”

The New York-based airline is also grappling with issues related to the delayed rollout of new aircraft. About a dozen new Airbus planes remain grounded because of problems with their Pratt & Whitney 1100G-JM turbofan engines, which Geraghty described as “an incredibly frustrating experience.”

Despite failed acquisitions and a lack of profitability, management is focused on “recovering from the brink and creating a better, stronger company for our customers and, most importantly, our team members.”

A centerpiece of Geraghty’s turnaround plan is the budget airline’s premium offering. Yesterday, the airline unveiled plans for its first-ever airport lounges, which the CEO said are “probably the most important thing customers have asked for.” JetBlue lounges will begin operating in New York and Boston, with the first set to open at John F. Kennedy Airport late next year, followed by Boston Logan International Airport.

“At the end of the day, I feel like I’m in this role for a period of time to help JetBlue get through a difficult period,” Geraghty said.