SEATTLE, WA - Alaska Air Group Inc. (NYSE:ALK) announced today an extension of the Department of Justice's (DOJ) review period for its proposed merger with Hawaiian Holdings (NASDAQ:HA) Inc. The review, initially set to expire on August 5, 2024, will now continue until August 15, 2024.
The extension allows further DOJ examination of the merger, which would see Hawaiian Holdings become a wholly-owned subsidiary of Alaska Air Group. This move follows an agreement between Alaska and Hawaiian to not finalize the merger before the end of the 90-day review period, which started on May 7, 2024, after both companies complied with a request for additional information from the DOJ.
The merger agreement, first announced on December 2, 2023, has been under scrutiny by the DOJ to ensure compliance with antitrust laws. The timing agreement, entered on March 27, 2024, stipulated that the companies would wait for DOJ's written notice before concluding the deal. The extended deadline suggests that the DOJ is taking a closer look at the merger's implications for competition in the airline industry.
The merger between Alaska and Hawaiian, if approved, would result in a combined entity with a strengthened position in air transportation, particularly in the Pacific region.
This announcement is based on a press release statement.
In other recent news, airlines are facing challenges despite a surge in summer travel. American and Southwest Airlines (NYSE:LUV), along with other major carriers, have reported less than expected earnings due to an oversupply of seats and increased operating expenses. Analysts, like TD Cowen's Thomas Fitzgerald, have raised concerns over the airlines' ability to navigate these issues. In response, U.S. airlines are moderating capacity growth to potentially improve pricing power.
Furthermore, Susquehanna maintained a neutral rating on Alaska Air's shares but lowered the price target due to a challenging operating environment. However, the firm highlighted Alaska Air's robust financial health and solid balance sheet. Notably, Alaska Air is also undergoing significant leadership changes, promoting two executives and appointing a new president for its subsidiary, McGee Air Services.
The U.S. Treasury Department recently raised $556.7 million from auctioning warrants in 11 major U.S. airlines as part of COVID-19 relief efforts. American Airlines (NASDAQ:AAL) received the highest amount of government aid, followed by Delta, United Airlines, and Southwest Airlines.
Lastly, over 160 members of the U.S. House of Representatives have called for assistance in securing new contract agreements for approximately 80,000 flight attendants, including those from United Airlines, American Airlines, and Alaska Airlines.
InvestingPro Insights
As Alaska Air Group Inc. (ALK) navigates the extended DOJ review period for its proposed merger with Hawaiian Holdings Inc., investors are weighing the potential impacts on the company's financial health and market position. According to InvestingPro data, Alaska Air Group has a market capitalization of $4.9 billion and trades at a P/E ratio of 21.84, which is expected to adjust to a lower 10.22 based on last twelve months as of Q2 2024. This lower forward P/E ratio, combined with a PEG ratio of 0.52, suggests that the company's earnings growth is being undervalued, potentially offering an attractive entry point for investors.
InvestingPro Tips reveal that analysts are predicting Alaska Air Group to be profitable this year, with net income expected to grow. Despite 12 analysts revising their earnings downwards for the upcoming period, the company remains profitable over the last twelve months and is trading at a low P/E ratio relative to near-term earnings growth. However, it's important to note that the stock price has exhibited significant volatility, and short-term obligations exceed liquid assets, which could introduce additional risk.
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