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Germans Show Green to JetBlue

Updated from 4:25 p.m. EST

Germany's Lufthansa has agreed to buy 19% of JetBlue (JBLU - Get Report), signaling a vote of confidence in an innovative, comfort-focused carrier with a lagging share price and marking the latest foray into a U.S. company by a foreign investor.

The carriers said Lufthansa will spend approximately $300 million to buy 42 million shares of JetBlue at $7.27 each. JetBlue's stock rose 14% Thursday to $7.15. It had closed Wednesday at $6.25, just 10 cents above the 52-week low.

The agreement, which is subject to regulatory review, is scheduled to close in the first quarter. At that time, a Lufthansa nominee would join the JetBlue board.

Lufthansa approached JetBlue around the close of summer or early fall, said JetBlue CEO Dave Barger, on a conference call with analysts. "We look at Lufthansa as a really smart investor," he said. "What a huge affirmation statement that is, regarding their interest in JetBlue."

The transaction is strictly a financial one for now, he said, but "as the largest domestic airline at [New York's Kennedy International], JetBlue has continued to express an interest in exploring international alliances. We would consider exploring potential opportunities with Lufthansa or others at some point down the road."

At Kennedy, Lufthansa operates three flights a day, two serving Frankfurt and one to Munich, while JetBlue has a hub with 48 destinations. In all, Lufthansa flies to 17 U.S. cities and plans to add Seattle in the spring.

In a prepared statement, Lufthansa CEO Wolfgang Mayrhuber said: "Our investment reflects the confidence we have in JetBlue's quality, growth potential and management team. [It] presents Lufthansa with a compelling opportunity to invest in the U.S. point-to-point carrier market as the industry continues to evolve."
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