Deutsche Lufthansa AG chief executive officer Wolfgang Mayrhuber said he has bigger plans beyond a financial investment in JetBlue Airways Corp. and hopes to access the discount carrier's "humongous" U.S. network.
JetBlue's sale of a 19 percent stake to Europe's second-largest airline has "great strategic impetus for both companies," Mayrhuber said in an interview in Frankfurt on Friday, a day after JetBlue called the deal "strictly financial."
"They're a premium product supplier," Mayrhuber said. "They have a stronghold along the East Coast that we wouldn't find elsewhere, and they're very complementary to our routes and our alliance partners."
Mayrhuber's comments fleshed out how Cologne, Germany-based Lufthansa views the purchase, which was announced Thursday after regular business hours in Europe. JetBlue's base is New York's Kennedy airport, where Lufthansa could collect U.S. travelers for trans-Atlantic flights.
For JetBlue, the investment comes after a fivefold surge in net debt over the last four years to $2.17 billion, to help finance the fastest expansion of any of the eight largest U.S. airlines, according to data compiled by Bloomberg. JetBlue posted losses in each of the past two years.
"The cash infusion will address JetBlue's near-term, growing liquidity challenges, but does nothing to address mounting cost and revenue pressures," William Greene, a New York-based analyst for Morgan Stanley, wrote in a note Friday.
JetBlue plunged 56 percent this year before Thursday on increased competition from other low-cost carriers, the departure of its chief financial officer, a 53 percent surge in the price of jet fuel and concern that the slowing U.S. economy will dampen travel demand.
Lufthansa will pay $7.27 a share for its JetBlue stake, a 16 percent premium to the Dec. 12 price. JetBlue will issue 42.6 million new shares for the sale, which will have a total price of $309.6 million, according to a filing Friday.
"JetBlue isn't exactly a high-quality company," said Juergen Pieper, an analyst at Bankhaus Metzler in Frankfurt. "I can't see any positive effect on earnings" for Lufthansa. The German airline's 2006 sales were about 10 times as much as JetBlue's $2.36 billion.
Mayrhuber said Lufthansa looked "very closely" at JetBlue's finances and concluded they were in "solid" shape. "With our capital, they can further pay down debt," he said. The "weak U.S. dollar" against the euro was a benefit for Lufthansa in the investment, he added.
JetBlue CEO Dave Barger said selling the stake to Lufthansa was a "short, quick decision" after the German carrier broached the idea in the "summer, early fall."
"The only closure that we've had at this point in time is a financial transaction," Barger said Friday in an interview in Frankfurt. The two eventually will "explore future opportunities," he said.
Along with its new holding, Lufthansa gains the ability to block the sale of more than a 25 percent stake of JetBlue to a third party, according to Friday's filing. The German company gets one seat on JetBlue's board and may have the right to one more in the event of a board vacancy after one year, though it can't control the discount airline's management or policies.