Shares of JetBlue Airways Corp. dropped more than 7 percent Thursday, after Lufthansa announced plans to issue notes convertible to JetBlue stock.
THE SPARK: The German airline, which owns a stake in JetBlue, said the notes due 2017 will be sold in a private offering and could be exchanged to as many as 46.7 million shares of JetBlue common stock.
The move could drastically reduce Lufthansa's 16.5 percent stake in the New York-based airline. JetBlue currently has about 282.1 million shares outstanding.
THE BIG PICTURE: Deutsche Lufthansa AG also has the option to exchange the notes for cash instead of shares. The exchange premium will be set at pricing, which also was set to occur on Thursday, the company said.
Lufthansa said the offering is expected to settle on or around April 5 and proceeds will be used for general corporate purposes.
Meanwhile, federal prosecutors charged JetBlue captain Clayton Osbon with interfering with a flight crew following his bizarre outburst Tuesday on a flight from New York to Las Vegas.
In court documents prosecutors described a midair breakdown that they say began with cockpit ramblings about religion and ended with passengers wrestling Osbon to the cabin floor and the flight being diverted to Amarillo, Texas.
THE SHARES: Down 38 cents, or 7.3 percent, to $4.84 in heavy afternoon trading, after falling as low as $4.73 earlier in the day. Over the past 52 weeks, JetBlue shares have traded between $3.40 and $6.38. They have been more or less flat since the start of the year.