CORRECT: JetBlue shares surge on report of Lufthansa stake
By Laura Mandaro, MarketWatch
Last Update: 3:09 PM ET Dec 13, 2007
This update corrects the size of the potential stake and the spelling of the JetBlue spokeswoman's name.
SAN FRANCISCO (MarketWatch) -- JetBlue Airways Group shares surged as much as 41% Thursday afternoon, lifting the sector out of a morning sell-off, on news that Deutsche Lufthansa may take a minority stake in the airline carrier.
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JetBlue shares surge on report of Lufthansa stake
CORRECT: JetBlue shares surge on report of Lufthansa stake
The Forest Hills, N.Y.-based carrier's shares (JBLU: news) turned around and headed higher after the New York Times reported on its Web site that Germany's Lufthansa was in talks to buy a roughly 20% stake of JetBlue.
Citing unnamed people briefed on the matter, the newspaper site said that the announcement could be as made as soon as Thursday afternoon following the close of stock trading.
JetBlue spokeswoman Jenny Dervin said that the company would not "comment on rumors or speculation."
A representative for Lufthansa in New York also declined comment.
Shares, which had hit a new annual low in early trading, jumped as much as $2.58 to $8.83. They were last trading 15% higher at $7.19. The Amex Airline Index (.XAL: news) , which had also hit a new annual low earlier in the day, was last up nearly 2% at 37.61.
Interest from Lufthansa would illustrate the ability of foreign investors to take advantage of the euro's strength against the dollar, according to the New York Times. If the German carrier were to limit its stake to 20%, Lufthansa would remain below federal limits on foreign ownership in a domestic airline. A passive investment would open up the opportunity for Lufthansa to make a bigger deal in the future, the report added, citing unnamed sources.
Wall Street has been hungry to see airline mergers as operating conditions for the industry have worsened, hammering stock prices. Oil prices have jumped past $92 a barrel, up more than 50% from the start of the year, prompting airlines including Southwest Airlines Co. (LUV: news) , Continental Airlines Inc. (CAL: news) and Delta Air Lines Inc. (DAL: news) to say they will cut plans for growth next year to offset higher fuel costs. Several have noted slowing domestic demand.
Shares in Delta Air, often speculated as a potential buyer for JetBlue, were last up 0.5% at $15.82.
Laura Mandaro is a reporter for MarketWatch in San Francisco.
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