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(Associated Press)– Alaska Airlines moved a step closer to acquiring Hawaiian Airlines after the U.S. Justice Department chose not to challenge the $1 billion deal, a deal the airline said would create a company that can better serve travelers.
Alaska Airlines announced in December that it would acquire Hawaiian Airlines shares for $18 per share in cash. The deal includes $900 million in debt held by Hawaiian Airlines.
The merger will preserve both airlines’ brands, a rarity in the industry where decades of acquisitions have left just four major carriers dominating the U.S. market.
Alaska Airlines and Hawaiian Airlines said the merger, which has little overlapping routes, is intended to allow the new airline to better compete with the four largest U.S. airlines: American Airlines, Delta Air Lines, Southwest Airlines and United Airlines.
Hawaiian Holdings Corp., the parent of Alaska Airlines and Hawaiian Airlines, said in a regulatory filing with the U.S. Securities and Exchange Commission on Tuesday that the Justice Department’s review period, which had been extended multiple times, expired after midnight.
The deal still needs approval from the Department of Transportation, with which Alaska and Hawaiian have been working to resolve remaining issues, according to U.S. Securities and Exchange Commission filings.
The Justice Department’s decision to approve the deal runs counter to two recent attempts by the Biden administration to oppose further consolidation in the airline industry. The Justice Department successfully sued to block JetBlue Airways’ acquisition of budget carrier Spirit Airlines and to block JetBlue’s partnership with American Airlines in the Northeast. In both cases, the government argued that allowing the deals would reduce consumer choice and drive up prices.
If Alaska Airlines and Hawaiian Airlines reach a deal, it would be the first major U.S. airline merger since Alaska Airlines beat out JetBlue Airways to acquire Virgin America in 2016.
Hawaiian Holdings Inc. rose more than 12%. Alaska Air Group Inc. was flat.
Like major airlines such as Alaska Airlines, Hawaiian Airlines has yet to recover from the coronavirus pandemic.
Hawaiian relies heavily on tourism from Japan, which has fallen sharply in the wake of the coronavirus pandemic and is now suffering from a weak yen, which has lost about 40% of its value against the dollar since the beginning of 2021. In addition, Hawaiian faces stiffer competition on flights between the islands and the U.S. mainland and Southwest on intra-island flights.
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