Alaska Air Group's (ALK) proposed acquisition of Hawaiian Airlines parent Hawaiian Holdings (HA) has cleared the U.S. Department of Justice after the period for its regulatory investigation expired yesterday. Hawaiian Holdings' stock has responded to the news by jumping more than 11% in Tuesday's session, while ALK shares are down slightly at last check.
"This is a significant milestone in the process to join our airlines," Alaska Air Group said in a statement. The air carrier added that during the Department of Justice's review, it worked closely with Hawaii's attorney general "to reinforce and expand upon our commitments for the future of Hawaiian Airlines" as well as local consumers. "These include plans to maintain the Hawaiian Airlines brand and local jobs and continue providing strong service between, to, and from the Islands," it said.
The $9.1 billion merger, first announced last December, still does not have the all-clear, though. While this is a major regulatory win, the transaction still remains subject to other closing conditions, including approval by the U.S. Department of Transportation (DOT), Alaska Air Group said.
According to CNBC, the Department of Transportation released a statement Tuesday saying it "is reviewing the application and can only approve a transfer if it is in the public interest."
Hawaii Governor Josh Green said Tuesday that he is "confident that by the joining of these two airlines, a stronger company will emerge and offer more travel options for Hawaii residents and local businesses – and will enhance competition across the U.S. airline industry."
Is Alaska Air stock a buy, sell or hold?
Alaska Air Group has struggled on the price charts in 2024, down nearly 11% for the year to date. Still, analysts are hopeful the industrial stock can stage a turnaround. According to S&P Global Market Intelligence, the consensus analyst target price for ALK stock is $52.07, representing an upside of nearly 50% to current levels. Additionally, the consensus recommendation is Buy.
However, not all analysts are bullish on the stock. Financial services firm CFRA Research has a Hold rating on ALK stock with a $39 price target.
CFRA Research analyst Siye Desta says the air carrier faces several growth risks, including weaker domestic demand, higher labor costs and the grounding of its Boeing 797-9 Max fleet.
Still, Desta's $39 price target on ALK stock sits nearly 12% above where it's currently trading.
