Billionaire Carl Icahn just bought nearly 10% of popular airline

Some call him the original corporate raider. 

Some say he inspired — at least in part — the villainous stockbroker Gordon Gekko in the 1987 film "Wall Street," who uttered the infamous words "greed is good." 

And he also seems to like airlines, as shareholders of JetBlue  (JBLU)  are finding out.

He, of course, is Carl Icahn, billionaire, activist investor, and former presidential adviser, who got the "corporate raider" tag after acquiring Trans World Airlines, which once belonged to Howard Hughes, in a leveraged buyout in 1988.

Icahn systemically sold off TWA's assets to pay his debts, including selling the airline's prized London routes to American Airlines  (AAL)  in 1991 for $445 million, a move that angered many of the airline's employees.

“It became more and more apparent that Carl was not interested in growing the airline but in using TWA as a financial vehicle to acquire wealth for himself,” Jeff Darnall, a former TWA pilot, told St. Louis Magazine in 2006.

Icahn, also one of the airline's creditors, resigned as chairman in 1993. And through a deal known as the Karabu ticket agreement, he was able to buy any ticket that connected through St. Louis for 55 cents on the dollar and resell them at a discount.

Stocks rise with the 'Icahn Lift'

The deal reportedly cost the beleaguered company $100 million. TWA went in and out of bankruptcy until the airline that traced its roots back to legendary aviator Charles Lindbergh stopped flying on Dec. 1, 2001.

Icahn kept going, purchasing shares in companies he thought were undervalued and then publicly outlining plans to fix the companies' problems. 

He reportedly employed a technique called greenmail, where one buys enough shares of a company to threaten a hostile takeover, so the target company will instead buy its shares back from the investor at a premium.

Greenmail, which Berkshire Hathaway CEO Warren Buffett once called “odious and repugnant,” has been outlawed in several states.

Icahn is also famous for the so-called Icahn Lift, where institutional investors follow his lead, buy into the companies he has focused on, and the shares rise.

Over the years, this phenomenon has occurred with shares of such companies as Texaco, Apple  (AAPL,)  and eBay  (EBAY) , to name just a few.

Now, JetBlue seems to be getting a boost out of the Icahn Lift on news that the activist investor took an almost 10% stake in the airline. JetBlue  (JBLU)  shares surged nearly 15% on Feb. 13 at the last check.

Icahn paid an average of $3.56 a share for his 33.6 million shares, according to a filing with the Securities and Exchange Commission. The shares are valued at $204.1 million based on the carrier's last closing price of $6.07 per share.

In the filing, Icahn said he bought the airline’s shares believing that “they were undervalued and represented an attractive investment opportunity.”

The filing also said that he intended to continue discussing the possibility of board representation with JetBlue's management and board members.

JetBlue is facing challenges

“We are always open to constructive dialogue with our investors as we continue to execute our plan to enhance value for all of our shareholders and stakeholders," JetBlue said in a statement. 

The airline's new chief executive, Joanna Geraghty, just started work on Monday. And the carrier has been facing some challenges. 

Last month, a federal judge rejected the company’s planned $3.8 billion acquisition of ultra-low-cost carrier Spirit Airlines  (SAVE)  after agreeing with the U.S. Department of Justice that the deal was anti-competitive and would harm ticket buyers.

JetBlue's lawyers had called the case a "misguided" challenge to a merger of the nation's sixth- and seventh-largest airlines.

In May, a judge in a different case found that JetBlue's U.S. Northeast partnership with American Airlines violated antitrust law.

JetBlue subsequently terminated the alliance, Reuters reported, while American decided to appeal.

Last year, the short-selling firm Hindenburg claimed that Icahn Enterprises IEP had been using inflated asset valuations, citing “Ponzi-like economic structures” at the holding company and alleging that Icahn had used money from new investors to pay out dividends to old ones.

Icahn pushed back against Hindenburg, according to the Associated Press, calling the firm’s report “self-serving” and “intended solely to generate profits on Hindenburg’s short position at the expense of IEP’s long-term unitholders.”

Icahn did address some of the issues Hindenburg raised, and after negotiations he and his lenders agreed to amend agreements that tied his personal loans to the trading price of Icahn Enterprises shares, a main risk the short-seller outlined.

Regardless, whatever happens next to JetBlue now that Icahn is involved will be interesting.