Alaska Air is proceeding closer to acquiring Hawaiian Airlines as the U.S. Department of Justice decides not to challenge the $1 billion deal, which the carriers say will result in a stronger company for travelers.
The merger, which includes Alaska Air paying $18 in cash for each share of Hawaiian and assuming $900 million in debt, aims to maintain both airlines’ brands, an uncommon occurrence in an industry dominated by a few major carriers.
The big picture: Alaska and Hawaiian have limited overlapping routes, and the merger is intended to enhance their competitiveness against the “Big Four” airlines in the U.S. market: American Airlines, Delta Air Lines, Southwest Airlines and United Airlines.
- The Justice Department’s decision to allow the deal goes against the Biden administration’s stance on recent consolidation attempts in the airline industry, where it has opposed similar mergers on the grounds of reduced choice and higher prices for consumers.
What we’re watching: While the Justice Department’s approval is a significant hurdle cleared, the merger’s completion still requires approval from the Department of Transportation, with Alaska and Hawaiian working on resolving any outstanding issues with transportation regulators.
- If the merger is finalized, it would be the first significant merger between U.S. airlines since 2016, when Alaska outbid JetBlue to acquire Virgin America.
Go deeper: Following the news, shares of Hawaiian Holdings Inc. surged over 12%, while Alaska Air Group Inc. saw no significant change in its stock.
