Alaska Air-Hawaiian deal closer as DOJ ends antitrust review

Alaska Air Group Inc. and Hawaiian Holdings Inc. are one step closer to finalizing their $1.9 billion merger after the US Justice Department decided against challenging it.

The airlines said the waiting period for the antitrust review has now expired. But Alaska and Hawaiian still need approval from the US Department of Transportation. The agency must determine the proposed acquisition is in the public interest before it can approve the necessary route transfers. 

“This is a significant milestone in the process to join our airlines,” Alaska Air said in a statement.

The decision is an abrupt change of course for the Justice Department, which carried out the Biden administration’s pro-competition stance by blocking a merger between JetBlue Airways Corp. and Spirit Airlines Inc. and forcing the breakup of a regional partnership between JetBlue and American Airlines Group Inc. since the beginning of last year.

Hawaiian’s shares jumped 11% at 9:32 a.m. in New York on Tuesday. Alaska Air’s stock was little changed. 

The planned merger had been under federal scrutiny since February. The Transportation Department can impose conditions, such as requiring the carriers to maintain service levels for certain routes, to ensure the deal serves consumers. In the past, the department has also required airlines to give up flight slots or gates at busy airports to promote competition. 

The combination of Alaska and Hawaiian would capture more than 50% of Hawaii’s airline market, which has annual revenue of $8 billion, the carriers have said. But travelers in Hawaii would be able to reach more destinations through the combined networks, while creating a stronger competitor to the four largest domestic airlines that dominate the US market.

Alaska’s proposed purchase, disclosed in December, values Hawaiian’s equity at about $1 billion and includes $900 million of debt. Alaska will be the parent holding company, headquartered in Seattle, with Alaska Airlines and Hawaiian Airlines continuing to operate under their separate brands.

Alaska flies 24 routes between the mainland US and Hawaii, while Hawaiian has 15. The airlines have 12 overlapping routes and the deal would give the combined airlines the largest share of flights to the Hawaiian Islands, overtaking United Airlines Holdings Inc. and Southwest Airlines Co.