Hawaii stocks fall on concerns over US Justice Department merger approval

Shares of Hawaiian Airlines’ (HA, Honolulu) parent company, Hawaiian Holdings, fell 9% on July 25 after reports emerged that the U.S. Department of Justice (DOJ) is unlikely to approve a proposed $1.9 billion merger with Alaska Airlines (AS, Seattle Tacoma International), the holding company of Alaska Air Group.

According to financial market news site Seeking Alpha, traders were reacting to a report from a similar site, CTFN, which cited anonymous but well-placed sources as saying that the DOJ was preparing to challenge the merger or block the deal altogether. “The parties have not provided remedies because there are no enforceable remedies,” one source told CTFN.

Capitol Forum reported that the Justice Department and state attorneys general were preparing to file a lawsuit challenging the proposed merger, but that they were also “considering alternative measures.”

In May, Hawaiian Holdings and Alaska Air Group announced that they had complied with a second request from the DOJ’s Antitrust Division to submit additional information and documents, triggering a 90-day waiting period until Aug. 5, during which the department must make a decision on the transaction.

Market uncertainty surrounding the merger was reportedly fueled by the U.S. Department of Justice blocking the merger between JetBlue Airways (B6, New York JFK) and Spirit Airlines (NK, Fort Lauderdale International) in January.

Hawaiian Holdings agreed on Dec. 2, 2023, to merge with Alaska Air Group and its wholly owned subsidiary Marlin Acquisition Corp. Under the terms, Marlin would merge with Hawaiian Holdings, which would continue to operate as a subsidiary of Alaska Air Group. Alaska would assume $900 million of Hawaiian’s debt. The boards of both companies have approved the merger, which aims to combine their operations while maintaining separate brand identities.

ch-aviation has asked both airlines for comment.