Alaska Air is moving forward with its acquisition of Hawaiian Airlines as the U.S. Department of Justice has opted not to challenge the $1 billion deal, which the airlines believe will enhance their ability to serve passengers. In December, Alaska Air revealed its plans to acquire Hawaiian by paying $18 in cash for each Hawaiian share, totaling $900 million alongside assuming Hawaiian’s $900 million debt. Despite numerous industry consolidations leaving only four major carriers in the U.S., both brands will be maintained post-merger, as Alaska and Hawaiian operate on mostly non-competing routes and aim to boost competitiveness against American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines.
The regulatory filing to the Securities and Exchange Commission on Tuesday disclosed that the Justice Department review period expired without challenge just after midnight, though final closure is pending Department of Transportation approval. This move by the Justice Department contradicts the Biden administration’s recent actions against consolidation efforts in the airline sector, such as blocking JetBlue’s acquisition of Spirit Airlines and its partnership with American Airlines in the Northeast. Upon completion, this merger will be the most significant consolidation of U.S. airlines since 2016, when Alaska outbid JetBlue to purchase Virgin America.
Shares of Hawaiian Holdings Inc. surged over 12% following the news, while Alaska Air Group Inc. remained stable. Hawaiian Airlines continues to grapple with the lingering effects of the COVID-19 pandemic, particularly due to a decrease in Japanese tourism, worsened by the yen’s depreciation against the dollar throughout 2021. Furthermore, Hawaiian faces heightened competition on inter-island and U.S. mainland routes, including from Southwest Airlines.
