Alaska Air Group’s (ALK) potential combination with Hawaiian Holdings (HA), the parent company of Hawaiian Airlines, has passed the major antitrust regulatory hurdle. Alaska released a statement noting that the time period for the U.S. Department of Justice’s (DOJ) investigation into the long-pending merger expired this morning. This implies that the DOJ is not worried about the merger triggering any monopolistic or anti-competitive issues. The deal now awaits the final clearance from the U.S. Department of Transportation (DOT).
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Potential Benefits of the Alaska-Hawaiian Airlines Merger
Alaska and Hawaiian Airlines announced their willingness to merge in December 2023, in a $1.9 billion all-cash deal. Alaska agreed to pay $18 per share to acquire Hawaiian and assume $900 million in debt. The deal has faced its fair share of hurdles, with the DOJ’s acquisition review period getting delayed time and again.
Both companies have maintained that the merger will strengthen their offerings in the Hawaiian zone through more frequent flights. Together, the two companies are expected to have more than 50% of Hawaii’s market share.
If the deal goes through, the combined entity would become the fifth largest air carrier in the U.S. Alaska would have access to over 360 wide-body and narrow-body jets across more than 130 destinations. The two carriers have also agreed to retain their brands.
For Hawaiian Airlines, the deal would infuse fresh liquidity and expand its reach. Travel to Hawaii from Asian countries, especially Japan, has failed to pick up pace even after the pandemic. This has greatly impacted Hawaiian Holdings’ financials and stock price performance.
Is ALK a Good Stock to Buy Now?
On TipRanks, ALK stock commands a Strong Buy consensus rating based on seven Buys and one Hold recommendation. The average Alaska Air Group price target of $53 implies 51.6% upside potential from current levels. Year-to-date, ALK shares have lost 10.5%.
Is Hawaiian Airlines a Good Stock?
Owing to Hawaiian Airlines’ internal performance issues, analysts have a Hold consensus rating on HA stock. This is based on two Hold ratings on TipRanks. Also, the average Hawaiian Holdings price target of $13 implies 18.1% downside potential from current levels. HA shares have gained 11.8% so far in 2024, thanks to the anticipated merger.
