German Airline Now Holds 19 Percent Stake In LCC

JetBlue Airways and Deutsche Lufthansa AG recently completed their previously-announced stock purchase agreement transaction -- giving the German airline a 19-percent stake in the US low-cost carrier.

As ANN reported, in December 2007 Lufthansa announced it would pay $300 million for a 19-percent stake in JetBlue, marking the first time Lufthansa had made a move into the US airline industry. The deal gave JetBlue a welcome infusion of cash, and gives Lufthansa control over a potential takeover down the line.

In a release to ANN Tuesday, JetBlue said both sides would now "begin exploring innovative commercial arrangements designed to benefit both airlines and their customers" -- a decidedly euphemistic statement that could be taken in a variety of ways.

Lufthansa acquired roughly 42 million newly-issued shares in JetBlue, for $7.27 per share. The deal will also give Lufthansa a seat on JetBlue's board of directors, and lays the groundwork for what Lufthansa termed "an operation cooperation" in December.

"We are very pleased to become an investor in JetBlue," Lufthansa CEO Wolfgang Mayrhuber said last month. "Our investment reflects the confidence we have in JetBlue's quality, growth potential and management team. This investment presents Lufthansa with a compelling opportunity to invest in the US point-to-point carrier market as the industry continues to evolve. The transaction links two airlines with international reputations for quality, innovation and a service culture."

Lufthansa's stake in JetBlue falls under the 25 percent level of foreign ownership where the Department of Transportation gets nervous, though it's possible the carrier would try to add to its stake down the line, and test the DOT's restrictions.

FMI: www.jetblue.com, www.lufthansa.com