WASHINGTON- Alaska Airlines (AS) has announced an extension of the Department of Justice’s (DOJ) review period for its proposed merger with Hawaiian Airlines (HA). Initially set for August 5, 2024, the review deadline has been pushed back to August 15, 2024.
This ten-day extension, agreed upon by Alaska Airlines, its regional affiliate Horizon Air, Hawaiian Airlines, and the DOJ, marks the second delay in the review process. The reasons for this additional extension remain undisclosed.
Alaska Hawaiian Merger Delayed
Despite the prolonged review, Alaska Airlines maintains its stance on the benefits of the merger. The company asserts that the acquisition, structured as a cash transaction, would create a stronger platform for growth and competition within the United States aviation market.
Alaska Airlines emphasizes the potential positive outcomes of the merger, including long-term job creation, increased investment in local communities, and enhanced environmental initiatives. These projected benefits align with the airline’s strategy to position the merger as a net positive for both the industry and the public.
The airline has reiterated its commitment to full cooperation with the DOJ throughout the review process. This cooperation likely involves providing detailed information about the proposed merger’s potential impact on market competition, consumer prices, and industry dynamics.
The extended review period suggests that the DOJ is conducting a thorough examination of the merger’s implications. This level of scrutiny is not uncommon for significant airline mergers, given their potential to reshape the competitive landscape of the U.S. aviation industry.
As the new August 15 deadline approaches, stakeholders across the aviation sector will be closely watching for the DOJ’s decision. The outcome could have far-reaching consequences for airline competition, particularly in the Pacific region where both Alaska and Hawaiian Airlines have significant operations.
Reports of Blocking
Recent reports from Seeking Alpha, citing CTFN, suggest a high probability of the DOJ blocking the merger due to competition concerns and insufficient remedies from the airlines.
Alaska Airlines responded to these reports on July 29, affirming its ongoing cooperation with the DOJ and expressing optimism about the regulatory process nearing its conclusion. The airline anticipates learning more about the potential to finalize the transaction “in the coming days.”
On May 7, both airlines announced substantial compliance with the DOJ’s request for additional information, initially made on February 7. This compliance triggered a 90-day waiting period before the merger could be consummated unless the DOJ provided written notice of completed review.
The extended review period and reported concerns from the DOJ’s Antitrust Division underscore the complex regulatory landscape surrounding major airline mergers. The DOJ’s focus on competition issues highlights the potential impact this merger could have on the U.S. aviation market, particularly in the Pacific region.
Alaska Airlines maintains its position that the merger would enhance competition and growth in the U.S. airline industry. The company continues to emphasize the potential benefits, including job creation, community investment, and environmental initiatives.
$1.9 Billion Deal
This deal, valued at approximately $1.9 billion, includes Hawaiian Airlines’ net debt of $900 million.
Hawaiian Airlines’ financial position showed $248.1 million in cash, cash equivalents, and restricted cash at the end of Q1, down from $289.5 million in Q4 2023. The airline anticipates its Q2 operating revenue per available seat mile (RASM) to range between a 1.5% decrease and a 1.5% increase, while costs per ASM (CASM) are expected to rise between 8.4% and 10.7%.
Hawaiian Airlines is scheduled to release its Q2 results on July 30 after market close, providing crucial insights into its financial health amidst the pending merger.
In contrast, Alaska Airlines reported strong Q2 results on July 18, with a net income of $220 million under Generally Accepted Accounting Principles (GAAP). The carrier’s operating revenue grew by 2% year-on-year, reaching $2.8 billion. Alaska Airlines concluded the quarter with a robust $1.1 billion in cash, cash equivalents, and restricted cash.
What are your thoughts on the Alaska and Hawaiian Merger, will it move forward or it will be blocked by the DOJ? Let us know in the comment section below.
Join us on Telegram Group for the Latest Aviation Updates. Subsequently, follow us on Google News.
The post Alaska Airlines and Hawaiian Merger Delayed by DOJ appeared first on Aviation A2Z.