Source AP ©

Deutsche Lufthansa AG to acquire 20-percent stake in JetBlue Airways Corp

After the report that Deutsche Lufthansa AG is in talks to buy a stake of about 20 percent in JetBlue Airways Corp., the shares of the latter jumped more than 14 percent.

JetBlue officials declined to comment on what they called "purely a rumor." Lufthansa officials also declined comment.

The New York Times reported on its Web site that talks were underway and an announcement could come as early as after the markets close on Thursday.

A sale of a stake in the airline could bring JetBlue a cash infusion as the carrier has been struggling. JetBlue stranded thousands of passengers across the northeast after a February ice storm socked the region on Valentine's Day. The incident cost founder David Neeleman his job as chief executive, though he remains chairman.

Long time President Dave Barger was named CEO, and has brought in experts to fix JetBlue's operations.

Selling a stake to Lufthansa would benefit both airlines by bringing each new sources of traffic, said Ray Neidl, an analyst at Calyon Securities in New York.

"It's probably better for Lufthansa than JetBlue," Neidl said.

But it would also put Lufthansa in the driver's seat for any potential longer-term takeover of JetBlue. Lufthansa is barred from such a takeover under current laws restricting foreign ownership of domestic airlines to 25 percent, but there have been attempts over the years to overturn that law, Neidl said.

JetBlue shares rose 88 cents, or 14.1 percent, to $7.13 in afternoon trading Thursday in New York. That is about 58 percent below their high for the past year. That is a far steeper drop than the American Airline Index average of a 36.75 percent decline.

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