Activist investor Carl Icahn has amassed a 9.91% stake in JetBlue Airways (JBLU 1.05%), and other investors are joining him onboard. Shares of JetBlue opened up 17.2% on Tuesday and were up about 11% as of 10 a.m. ET after the stake was disclosed.

A new face in the cockpit

JetBlue has been flying through headwinds of late. In 2022, the airline won a bidding war for Spirit Airlines (SAVE), but that deal was blocked due to antitrust concerns earlier this year. The airlines are appealing, but in the meantime, JetBlue also sacrificed an important alliance with American Airlines Group in hopes of getting the Spirit deal accomplished.

The airline has a new CEO and faces difficult choices as it tries to improve operations and waits on its appeal of the Spirit ruling.

Into the fray steps Icahn, who disclosed the stake in an overnight regulatory filing. On the filing, Icahn said he believes the shares are "undervalued and represented an attractive investment opportunity," saying that he has had -- and intends to continue to have -- discussions with management and directors about possible board representation.

Icahn has a long history of airline investments, though not all have been successful. He was famously involved for years with Trans World Airlines, which fell into bankruptcy in 1992. It was eventually sold to American a decade later.

Carl Icahn is buying JetBlue -- should you?

Shares of JetBlue are nearly 70% below their highs from just a few years ago. By that measure, Icahn is almost certainly right that the stock is undervalued. Alas, the more difficult question is how JetBlue will be able to pull out of its tailspin.

JetBlue agreed to buy Spirit near the peak in what is always a cyclical industry, so it might be somewhat relieved if the deal falls through. But the airline has no easy path for growth absent a merger and has seen operations deteriorate while it's been focused on getting the deal done. Although airlines saw demand hold up well in 2023, there remain persistent fears that inflation and a slowing economy could take their toll.

Icahn might have a playbook to bring JetBlue back, but until we hear more details about what he plans or where the airline might go from here, caution is advised.