Alaska Air Group Inc. and Hawaiian Holdings Inc. have edged closer to completing their $1.9 billion merger following the expiration of the US Justice Department’s antitrust review period, indicating the government agency will not challenge the deal. However, the merger still faces another regulatory barrier: approval from the Department of Transportation, which which must also ascertain if the acquisition serves the public interest by ensuring necessary route transfers are beneficial.
The anticipated merger has been under federal examination since February. Historically, the Department of Transportation has the authority to impose various conditions to safeguard consumer interests before giving its final approval. In a statement, Alaska Air called the DOJ’s conclusion a “significant milestone” in the merger process. This decision marks a notable shift in the Justice Department’s stance, which has generally favored stringent antitrust scrutiny, evident in its objection to the JetBlue-Spirit merger and its dissolution of a partnership between JetBlue and American Airlines over the past year.
Immediate market reactions to the announcement were mixed. Hawaiian Holdings saw a considerable surge of 9.9% in pre-market trading, whereas Alaska Air’s shares remained relatively static.
If finalized, the union of Alaska and Hawaiian would control over half of Hawaii’s annual $8 billion airline market. Together, Alaska and Hawaiian Airlines plan on maximizing their combined networks to offer broader travel options for passengers while aiming to become a stronger contender against the four largest domestic carriers — United, Delta, American, and Southwest. Alaska’s proposal, which surfaced in December, evaluates Hawaiian Holdings’ equity at roughly $1 billion and integrates $900 million of debt. Upon completion, the combined entity will be headquartered in Seattle, with both airlines continuing their operations under existing brand names.
Currently, Alaska operates 24 routes between the mainland U.S. and Hawaii, while Hawaiian maintains 15. The merger would allow the combined entity to overtake competitors such as United Airlines and Southwest Airlines in the number of flights to the Hawaiian Islands.