Alaska Airlines recently won a major legal victory that advances its planned merger with Hawaiian Airlines. A U.S. District Court in Hawaii ruled on August 12, 2024 to dismiss the lawsuit challenging the acquisition, taking an important step toward the planned merger. The court’s decision marks a pivotal moment in the merger process between the two airlines and could have far-reaching consequences for the airline industry.
The lawsuit, filed by eight passengers and travel agents, sought to stop the $1.9 billion merger between Alaska Airlines and Hawaiian Airlines. The plaintiffs argued that the merger would further consolidate the industry, reduce competition and lead to higher airfares. They requested judicial review to prevent these potential negative effects.
However, the court dismissed the lawsuit because the plaintiffs failed to prove that they suffered a “specific or special injury” as a result of the merger. According to the statement from Alaska Airlines and Alaska Air Group, they welcome the decision and stress that the merger will benefit consumers in Hawaii, the continental United States and around the world. The companies are confident that the merger will increase competition and expand choice for customers.
The background of the merger
The merger, announced on December 2, 2023, will involve not only the combination of the two airlines, but also Alaska Airlines’ assumption of $900 million of Hawaiian Airlines’ debt. Both airlines plan to retain their brands and integrate their operating systems, a strategy that will help make the merger both commercially viable and beneficial to customers.
The merger was initiated by the parent companies of the two airlines, Alaska Air Group and Hawaiian Holdings. The aim is to strengthen the market position of both companies and to offer customers better service through operational synergies. The planned takeover is part of a larger wave of consolidation in the aviation industry, which has been accelerated by the pandemic and other economic challenges.
Further legal hurdles
Although the court dismissed the passengers’ lawsuit, the final decision on the merger is still pending. The U.S. Department of Justice, which is responsible for approving large mergers and acquisitions, must complete its review. On August 14, 2024, it was announced that the deadline for the DOJ’s review had been extended by 24 hours, to August 16. This suggests that there are still more regulatory hurdles to overcome before the merger can finally be completed.
The court’s decision has paved the way for Alaska Airlines and Hawaiian Airlines to take the next step in the merger process. Alaska Air Group stressed that the plaintiffs are “serial plaintiffs” who have filed similar lawsuits against other airline mergers in the past, but without success. This assessment reflects growing skepticism about the possibility that such lawsuits could seriously hinder the merger process.
On the other hand, the plaintiffs have already announced that they will appeal the decision. These legal disputes could further delay the merger process, especially if the appeal is successful and the case is re-examined.
Alaska Airlines’ legal victory in this case represents a major milestone in the merger with Hawaiian Airlines. While the lawsuit has been dismissed and the acquisition is on track for approval, the final decision of the U.S. Department of Justice remains to be seen. The merger could have significant implications for competition and service in the airline industry. The coming weeks will be critical in determining whether the merger can go ahead as planned or whether further legal and regulatory hurdles arise.
