Alaska Air Group Inc. and Hawaiian Holdings Inc. are one step closer to completing their $1.9 billion merger after the U.S. Justice Department decided not to challenge it.
The airlines said the waiting period for the antitrust review has now expired. However, Alaska and Hawaiian still need approval from the Department of Transportation. The agency must determine that the planned takeover is in the public interest before it can approve the necessary route changes.
The planned merger has been under federal scrutiny since February. The Department of Transportation can impose conditions to ensure the deal benefits consumers.
“This is an important milestone in the process of joining our airlines,” Alaska Air said in a statement.
The decision represents an abrupt change of course for the Justice Department, which implemented the Biden administration’s pro-competition stance by blocking a merger between JetBlue Airways Corp. and Spirit Airlines Inc. since early last year and forcing the dissolution of a regional partnership between JetBlue and American Airlines Group Inc.
Hawaiian shares rose 9.9 percent in U.S. premarket trading on Tuesday, while Alaska Air shares were little changed.
The Alaska-Hawaiian merger would capture more than 50 percent of Hawaii’s $8 billion annual airline market, the airlines said, but Hawaii travelers could reach more destinations through the combined networks while creating a stronger competitor to the four largest domestic airlines that dominate the U.S. market.
Alaska’s purchase proposal, announced in December, values Hawaiian’s equity at about $1 billion and includes $900 million in debt. Alaska will be the parent company based in Seattle, while Alaska Airlines and Hawaiian Airlines will continue to operate under their own brands.
Alaska offers 24 routes between the U.S. mainland and Hawaii, while Hawaiian offers 15. The two airlines overlap on 12 routes, and the deal would give the merged airlines the largest share of flights to the Hawaiian Islands, overtaking United Airlines Holdings Inc. and Southwest Airlines Co.
