Summary

  • The Department of Justice (DOJ) will continue reviewing the proposed Alaska Airlines and Hawaiian Airlines merger until August 15.
  • Previously, the DOJ had a deadline to review the transaction on August 5.
  • Alaska Airlines has reiterated that it has continued to cooperate with the DOJ on the case.

Alaska Airlines has issued a statement announcing that the Department of Justice (DOJ) would extend its review of its proposed merger with Hawaiian Airlines for an additional ten days, reiterating that it has been cooperating with the DOJ during the process.

Extended review

In a statement on July 30, Alaska Airlines said that earlier in 2024, the airline group, comprised of Alaska Airlines and Horizon Air, its regional affiliate, Hawaiian Airlines, and the DOJ, had agreed to extend the review deadline of their merger to August 5.

Now, the three parties have agreed to further extend the deadline for the review of the proposed transaction to August 15, without detailing the reasons why.

Alaska Airlines Boeing 737 MAX 9 taxiing on ground

Photo: Joe Kunzler | Simple Flying

Still, the airline, which would acquire Hawaiian Airlines in a cash transaction, affirmed that it has continued to believe this merger would enable a stronger platform for growth and competition in the United States.

In addition, the transaction would provide long-term job opportunities and foster investment in local communities and environmental efforts.

“We will continue to cooperate with the DOJ in this review process.”

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Probability of being blocked

In an earlier report, Seeking Alpha, citing CTFN, stated that the likelihood of the DOJ blocking the merger was very high, with the Department’s Antitrust Division expressing competition concerns and the lack of remedies from both airlines.

In response, Alaska Airlines said in a statement to Simple Flying on July 29 that the airline has continued cooperating with the DOJ, with the end of the regulatory process being in sight.

The carrier added that it expected to learn more about the potential to close the transaction “in the coming days.”

First Hawaiian Airlines Boeing 787-9

Photo: Hawaiian Airlines

The two airlines involved in the transaction already affirmed substantial compliance with a request for additional information from the DOJ, announcing the development on May 7. The Department requested the supplementary documents on February 7.

At the same time, Alaska Airlines, Hawaiian Airlines, and the DOJ agreed that the duo would not consummate their merger before 90 days after they had complied with the additional information request without the written notice from the DOJ that it had completed the review.

Related

Hawaiian Airlines Stocks’ Tumble As DOJ Reportedly Seeks To Challenge Alaska Airlines Merger

It is believed the DOJ will block the merger.

Bleeding cash

Alaska Airlines and Hawaiian Airlines announced the merger on December 3, 2023, stating that the former would acquire the latter for $18 per share, with the transaction being valued at around $1.9 billion, including Hawaiian Airlines’ net debt of $900 million.

Hawaiian Airlines, which ended Q1 with $248.1 million in cash, cash equivalents, and restricted cash (Q4 2023: $289.5 million), will announce its Q2 results after the markets close on July 30. During the former quarter’s results announcement, the airline said that it expected its operating revenue per available seat mile (RASM) to be down 1.5% or up 1.5% and costs per ASM (CASM) to be up from 8.4% to 10.7%.

Alaska Airlines and Hawaiian Airlines aircraft shutterstock_2121442103

Photo: christianthiel.net | Shutterstock

Alaska Airlines presented its Q2 results on July 18, reporting a net income of $220 million under Generally Accepted Accounting Principles (GAAP), with its operating revenue growing 2% to $2.8 billion year-on-year (YoY).

The carrier ended the period with $1.1 billion in cash, cash equivalents, and restricted cash.

Related

Alaska Airlines 2Q Revenues Reach $2.9 Billion But Net Income Dips 15%

Alaska Airlines has incrementally increased revenue and passengers but saw profits drop in the second quarter of 2024.

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