By Doyinsola Oladipo
NEW YORK (Reuters) -JetBlue Airways’ second-largest investor, Vladimir Galkin, is threatening to sell his near 10% stake in the struggling air carrier if the company’s cost-cutting plan and other broader efforts fail to turn around its performance.
Galkin, who lives in Miami, Florida, was a big winner from Gamestop’s “meme stock” rally in 2021 and invested over $200 million in JetBlue between February and August 2024. The New York air carrier has been struggling with weakened travel demand, as the company withdrew its full-year forecast in April, saying it is unlikely to break even in 2025.
Shares are down 43% year-to-date, while peers Delta Air Lines and United Airlines are down 17% and 18%, respectively. That’s left Galkin sitting on a losing position.
“I am underwater a little bit and just going to have to hold on to it. I don’t want to say for as long as it takes, obviously, but maybe for another year,” Galkin told Reuters. He has approximately 35 million shares, or $212 million invested in the company, according to a September U.S. regulatory filing, a position he confirmed with Reuters.
JetBlue in June reiterated plans to cut costs and focus on more profitable routes. Galkin said the memo was positive, but that the company’s “trajectory will be evident” in coming quarters.
He said JetBlue should consider reducing the size of its 13-member board to also cut costs, but did not say what other cuts he would make.
“The cost savings measures from the recent memo are part of JetForward and a continuation of our previously stated commitment to reduce costs, particularly as the industry as a whole has seen a macroeconomic step back in consumer demand,” the company said in a statement.
JetForward is the company’s multi-year plan to boost profits and deliver $800 million to $900 million in earnings before interest and taxes through 2027.
Galkin later said selling in one year was not a set deadline as he is hopeful JetBlue will start making money “sooner rather than later.”
He added that he thinks Wall Street is underestimating the potential of JetBlue’s collaboration with United, which will allow travelers to book flights on both carriers’ websites beginning in 2027.
JetBlue has reported profits in two of the last nine quarters. As of May 23rd, 10 equity analysts have a hold recommendation on the stock, with five “sell” and two “strong sell” ratings, according to LSEG data. There are no “buy” ratings.
Other large JetBlue investors, including BlackRock, Fidelity and T. Rowe Price, declined comment.
On Tuesday, the company announced business-class seats on its Orlando-to-Las Vegas route as it – along with rivals like Spirit – focuses on premium seats to boost revenue.
“It’s a positive in the sense that they’re not putting their head in the sand,” said Michael Matousek, head trader at U.S. Global Investors, which owns 1.4% shares of the company in the JETS exchange-traded fund (ETF).
He said the company’s plans to shed unprofitable routes and focus on higher-margin opportunities is positive for the long term.
(Reporting by Doyinsola Oladipo in New York; editing by David Gaffen & Shri Navaratnam)
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