Alaska Air is moving closer to acquiring Hawaiian Airlines after the U.S. Department of Justice decided not to challenge the $1 billion deal, which the airline says will make the company stronger for travelers.
The aim of the merger, in which Alaska Air will pay $18 in cash for each Hawaiian share and assume $900 million in debt, is to preserve the brands of both airlines – an unusual phenomenon in an industry dominated by a few large airlines.
The big picture: Alaska and Hawaiian’s routes have little overlap, and the merger is intended to strengthen their competitiveness against the “big four” airlines in the US market: American Airlines, Delta Air Lines, Southwest Airlines and United Airlines.
- The Justice Department’s decision to allow the deal to go ahead runs counter to the Biden administration’s stance on recent consolidation attempts in the airline industry, where it has opposed similar mergers on the grounds that choices are limited and prices are higher for consumers.
What we observe: While the Justice Department’s approval is a major hurdle, the Department of Transportation’s approval is still required to complete the merger. Alaska and Hawaiian are currently working with the transportation authorities to resolve any outstanding issues.
- If completed, the merger would be the first major merger between U.S. airlines since 2016, when Alaska outbid JetBlue and acquired Virgin America.
Go deeper: Following the news, shares of Hawaiian Holdings Inc. rose over 12%, while Alaska Air Group Inc. saw no notable change in its shares.
