Alaska Airlines has cleared a major hurdle in its plan to purchase rival Hawaiian Airlines in a $1.9 billion deal. (Photo by Mario Tama)
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Eight months after Alaska Airlines announced it was acquiring struggling rival Hawaiian Airlines in an all-cash transaction valued at $1.9 billion, the deal appears to have cleared regulators at the U.S. Department of Justice (DOJ).
In a statement released Monday, Alaska Airlines said that the period for antitrust regulators to investigate the merger ended without the agency filing a lawsuit to block the deal.
“This is a significant milestone in the process to join our airlines,” the carrier said, noting that it had worked closely with Hawaii’s Attorney General “to reinforce and expand upon our commitments for the future of Hawaiian Airlines and to Hawai‘i consumers.”
Before the deal can close, it must now pass scrutiny from the U.S. Department of Transportation (DOT). It wasn’t immediately clear how long that would take.
“Alaska Airlines and Hawaiian Airlines have filed a transfer application to combine under one certificate and cannot combine their operating authorities without the U.S. Department of Transportation’s approval,” a spokesperson for the agency said in an email. “The department is reviewing the application and can only approve a transfer if it is in the public interest.”
Historically, the airline industry has tended to drift toward consolidation. The combination of Alaska Airlines, North America’s sixth largest carrier based on passenger volume, and Hawaiian Airlines, currently the continent’s sixteenth largest, would become the largest consolidation of U.S. airlines since Alaska acquired Virgin America for about $2.6 billion in 2016. Virgin America was subsequently folded into Alaska’s operations.
In contrast, Alaska Airlines, which also owns regional airline Horizon Air, intends to keep Hawaiian as an independent brand yet synergize operations. Together, the two carriers represent a fleet of nearly 400 planes covering nearly 140 destinations.
In recent years, the Biden administration has flexed its antitrust chops to prevent mergers in the airline industry on the grounds that they tend to hurt consumers.
In March 2023, the Department of Justice filed an antitrust lawsuit against budget airline JetBlue to prevent its blockbuster $3.8 billion merger with Spirit Airlines. At trial this past January, the court found that JetBlue’s proposed takeover of Spirit was unlawful because it “does violence to the core principle of antitrust law: to protect the United States’ markets – and its market participants – from anticompetitive harm.”
And in May 2o23, a federal judge rejected a partnership between American Airlines and JetBlue after the government successfully argued that the alliance suppressed competition.
Hawaiian Airlines has struggled financially in recent years, posting a combined net loss of $205 million in the first two quarters of 2024.
Hawaiian’s share price has more than tripled since December, when the acquisition was first announced.
In December, Alaska Airlines CEO Ben Minicucci projected confidence that government would approve the deal, citing the two airlines’ 12 overlapping markets and an expanded network that he said would allow for more robust competition with the “Big Four” carriers—American, United, Delta and Southwest. “We are hopeful that it will be seen in a positive light,” he said.
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Publish date : 2024-08-20 07:36:00
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