Since early 2007, JBLU has lost more than 60% of its value. Stock collapsed completely when it crossed $9 last November. In hindsight, the commitment of LH seems foolish if they bought for price gain only at $7.27 with JBLU trading a tad above $5 right now.
However, I think LH sees it more as a strategic investment as compared to a regular investment. And, if LH was really clever, they could have bought put options (or written call options) at the same time they made the commitment for $7.27. Thus, they would have mitigated price loss while retaining a seat on the board of B6.

Board control? Whoa there, pardner.

Foreigners aren't allowed to control US airlines. LH is supposed to get a seat on the board but that certainly doesn't equate to control.

Sure...

And that's the main reason, the US airline industry is suffering and offers those lousy products to its customers. Since there's no money being invested from overseas, no concolidation and investing takes place. I try to avoid any US airline on my regular transatlantic flights, due to their lousy quality.

Have you ever flown with Emirates, Thai, Singapore Airlines,... ? Compare the quality with any US airline of your choice. It's like a Mercedes vs. a Chevy Aveo.

I don't agree that it's a lack of foreign investment that's causing lousy service. I find it remarkable that in the US, the economy with the greatest emphasis on marketing in the world, the 5 or 6 'legacy' carriers do next to nothing to develop their brands, instead of which they've allowed themselves to become a single grey mess with brand recognition only slightly better than gasoline. The result has been they now compete pretty much on price alone, rather than using their brands to command profitable ticket prices.

In that respect at least JetBlue is (was?) a breath of fresh air in the US airline business. It seems bizarre to me that were even considering that BA or LH or SQ or anyone else could turn around one of the majors, but IMO the first step has to be for the carriers to concentrate on the business in hand and not on the day-to-day stock price and sexy financial engineering.

Heck, Icahn and TWA, then the workers highly leveraged deal at United (to mention just two) show us what happens when you forget the reason the airline exists.

Yes, you're undoubtedly correct -- the reason the US airlines are in the toilet is because the European and Asian airlines aren't allowed to make large investments and to control the US airlines.

Thanks for the laugh.

Of course, there aren't any failures among European or Asian airlines, are there? None whatsoever. None that have failed and none that offer crappy service.

Yes, I have. And since those airlines don't take me everywhere I want to go, I've made a choice to focus my business with an airline (and with an alliance) that takes me everywhere I want to go. Your mileage may vary.

This 19% stake seems like it would help jetBlue from being absorbed by Delta or American [mostly a fat chance unless you get some banks/funds involved like TPG etc]. Lufthansa can also get some Airbus planes at a discount through jetBlue.

Plus, LH might be able to provide B6 with some capital to buy an airline like Spirit or perhaps Frontier. Spirit would be perhaps the best and maybe jetBlue could swap those A319's for some A320's.

As most people say, a codeshare would seem likely.

I stand corrected; the deal has closed:

http://biz.yahoo.com/pz/080122/134718.html

The PR didn't say anything about the price per share paid - was it the $7.27 that was agreed upon, or was it the current (this morning's) share price of $4.63?

The About JetBlue section is bigger than the actual meat of the press release but the following is certainly interesting.

"With the conclusion of the financial transaction, Lufthansa and JetBlue will begin exploring innovative commercial arrangements designed to benefit both airlines and their customers."

This is definitely more than LH sitting on the sidelines looking for a return on their money. Codeshares?

I think that there is going to be more to this "financial" deal in the coming year or so. I think Luftansa want's something out of this in the end. Should be interesting to see how this plays out.

Forbes and the Associated Press are showing that Lufthansa paid $7.27 per share. 42million shares where purchased.

Story from Forbes