The (ALK) planned takeover of Hawaiian Holdings (HA), the parent company of Hawaiian Airlines, cleared the U.S. Department of Justice yesterday after the deadline for the regulatory investigation passed. Hawaiian Holdings stock reacted to the news by jumping over 11% in Tuesday’s session, while ALK shares were down slightly at last check.
“This is a significant milestone in the process of merging with our airlines,” Alaska Air Group said in a statement. The airline added that it worked closely with Hawaii’s Attorney General during the Justice Department’s review “to reaffirm and expand our commitments to the future of Hawaiian Airlines” and to local customers. “This includes plans to preserve the Hawaiian Airlines brand and local jobs and continue to provide strong service between, to and from the islands,” it said.
The $9.1 billion merger, first announced last December, has not yet been approved. While it is a major regulatory victory, the deal is subject to other closing conditions, including approval from the U.S. Department of Transportation (DOT), Alaska Air Group said.
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According to CNBC, the Department of Transportation issued a statement on Tuesday saying it was “reviewing the request and could only approve a relocation if it was in the public interest.”
Hawaii Governor Josh Green said Tuesday he was “confident that the combination of these two airlines will create a stronger company that will provide more travel options for Hawaii residents and local businesses – and increase competition across the U.S. airline industry.”
Should I buy, sell or hold Alaska Air stock?
Alaska Air Group is struggling on the price charts in 2024, having fallen nearly 11% year to date. Nevertheless, analysts are confident that the industrial stock can turn things around. According to S&P Global Market IntelligenceThe consensus analyst price target for ALK shares is $52.07, which represents an upside potential of nearly 50% from current levels. Furthermore, the consensus recommendation is Buy.
However, not all analysts are optimistic about the stock. Financial services firm CFRA Research rates ALK stock as “Hold” and has a price target of $39.
According to Siye Desta, analyst at CFRA Research, the airline faces several growth risks, including weaker domestic demand, higher labor costs and the retirement of its Boeing 797-9 Max fleet.
Still, Desta’s $39 price target for ALK stock is nearly 12% above current trading value.
