By Rajesh Kumar Singh and Kannaki Deka

(Reuters) – JetBlue Airways (NASDAQ:) has agreed to nominate two members from activist investor Carl Icahn’s agency to its board, avoiding a proxy battle.

The 88-year-old Icahn, who goes after undervalued firms, has not spelled out the technique he needs JetBlue to embrace. On Monday he disclosed a stake of about 10% within the airline, one among his first large strikes of 2024.

Jesse Lynn, normal counsel of Icahn Enterprises and Steven Miller, portfolio supervisor of Icahn Capital, will be part of its board, JetBlue mentioned on Friday.

“We respect the constructive engagement we now have had with JetBlue’s board and management crew,” Icahn mentioned in a press release.

JetBlue’s shares had been up about 3% in prolonged buying and selling.

Shares of the New York-based airline have misplaced greater than half their worth prior to now two years amid a battle to return to sustainable profitability. The corporate not solely faces a problem to plot its path ahead after a U.S. federal choose blocked its deliberate $3.8 billion acquisition of ultra-low-cost service Spirit Airways (NYSE:), however can also be grappling with increased working prices and uneven journey demand.

JetBlue mentioned the Icahn Group has agreed to not conduct a proxy contest or have interaction in any solicitation of proxies concerning any matter, together with the election of administrators at its annual assembly this 12 months.

Lynn and Miller will function non-voting observers to the board by means of JetBlue’s annual assembly of stockholders this spring, after which era they’ll be part of the board as full voting members.

With the additions of Lynn and Miller, the JetBlue board will broaden to 13 administrators, 12 of whom are anticipated to be impartial, the airline mentioned.

Icahn has constructed his status through the years as a company raider and activist shareholder, pressuring firms to make modifications to their enterprise methods and increase their shares.

JetBlue and Spirit have each requested for an expedited attraction of the choose’s latest resolution, with a U.S. appeals court docket set to listen to arguments in June. However some analysts say the possibilities of a profitable attraction are low.

JetBlue’s new CEO, Joanna Geraghty, has vowed “aggressive motion” to return the airline to profitability.

The corporate’s proposed acquisition of Spirit, nonetheless, has turn into an even bigger problem for some analysts. With considerations mounting over Spirit’s funds, they are saying JetBlue could be higher off strolling away from the deal because it runs the chance of impairing its stability sheet.

In a regulatory submitting this week, JetBlue acknowledged that its indebtedness following the merger will likely be considerably increased and will enhance borrowing prices. But the corporate final month mentioned the merger settlement remained in impact.

JetBlue’s inventory has gained 36% because the merger ruling.

Analysts at Deutsche Financial institution this week mentioned Icahn’s funding within the U.S. airline business bolstered their view that the sector would seemingly endure extra restructuring past beforehand introduced mergers.