In a significant move within the airline industry, Hawaiian Holdings (NASDAQ:HA) Inc., the parent company of Hawaiian Airlines, announced today that it is poised to merge with Alaska Air (NYSE:ALK) Group Inc. after receiving interim exemption approval from the U.S. Department of Transportation (DOT). This regulatory milestone, detailed in a recent SEC filing, clears a major hurdle toward finalizing the merger, which is anticipated to occur on or about September 18, 2024.
The merger, initially agreed upon on December 2, 2023, involves Alaska Air Group's subsidiary, Marlin Acquisition Corp., merging into Hawaiian Holdings, with the latter surviving as a wholly owned subsidiary of Alaska Air Group. This strategic consolidation is subject to customary closing conditions, but with the DOT's approval now secured, both parties expect the transaction to be completed promptly.
The companies have been awaiting the DOT's decision on their joint interim exemption application, a critical step in advancing their merger plans. The granted exemption allows the airlines to move forward with the integration process, which is set to create a combined entity operating under the Alaska Air Group umbrella.
This development is part of a broader trend in the aviation sector, where airlines are seeking partnerships and consolidations to enhance network efficiencies, expand their market presence, and increase competitiveness. Both Hawaiian Holdings (NASDAQ:HA) and Alaska Air Group are well-established carriers with strong brand identities, and the merger is expected to leverage the strengths of both.
The companies also recognize the potential for legal proceedings or other regulatory and economic developments that could influence the merger's outcome. Hawaiian Holdings has emphasized that all forward-looking statements regarding the merger's expected timing are based on currently available information and that they are committed to updating the public as required by law.
In other recent news, Hawaiian Holdings and Alaska Air Group are making significant progress with their proposed merger. The Department of Justice (DOJ) review period has expired without action, allowing the companies to move forward towards final approval from the Department of Transportation (DOT). TD Cowen has adjusted its outlook on Hawaiian Holdings, raising the stock's price target to $18.00 from $13.00, while maintaining a Hold rating.
Despite reporting an adjusted EBITDA loss of $21 million for Q2 2024, Hawaiian Holdings managed to raise $400 million through financing 10 A321 neo aircraft and exchanged $1.2 billion in loyalty bonds due in 2026 for new bonds maturing in 2029. The company has also successfully deployed Starlink inflight connectivity across all 18 Airbus A321neos. These are significant developments in the context of a global shortage of new aircraft.
The proposed merger between Hawaiian Holdings and Alaska Air Group, if approved, would grant Alaska Air control over more than half of the flight market to Hawaii. Analysts from TD Cowen believe this cooperation is the next step in finalizing the transaction, which has already cleared a significant regulatory hurdle.
InvestingPro Insights
In light of Hawaiian Holdings Inc.'s impending merger with Alaska Air Group Inc., investors are keenly observing the financial health and performance metrics of the company. According to InvestingPro data, Hawaiian Holdings has a market capitalization of approximately $936.18 million, signaling a substantial size within the airline industry. However, the company's P/E ratio stands at -2.62, underscoring the challenges it faces in terms of profitability. Furthermore, the revenue growth for the last twelve months as of Q2 2024 is slightly negative at -0.63%, indicating a potential area for improvement as the company moves towards the merger.
InvestingPro Tips highlight areas of concern such as the significant debt burden and the risk of not being able to make interest payments, which could be critical factors for investors to monitor in the context of the merger. Additionally, with four analysts having revised their earnings downwards for the upcoming period, there is a sentiment of caution regarding Hawaiian Holdings' near-term financial performance. These concerns are balanced by a strong return over the last year, with a price total return of 118.14%, reflecting investor optimism in certain aspects of the company's trajectory.
For those seeking a deeper dive into Hawaiian Holdings' financials and future outlook, there are additional InvestingPro Tips available at https://www.investing.com/pro/HA, which can provide investors with a more comprehensive analysis as they evaluate the implications of the merger with Alaska Air Group.
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