Hawaiian Airlines' parent surges on $1.9 bln buyout deal with Alaska Air

Hawaiian Holdings

04/12/2023 12:22

Dec 4 (Reuters) - Shares of Hawaiian Holdings  HA.O ,
the parent of Hawaiian Airlines, nearly tripled in premarket
trade on Monday after Alaska Air Group  ALK.N  agreed to acquire
it for $1.9 billion, including debt.
    Hawaiian shares were trading at $13.60 premarket, below
Alaska's offer price of $18 per share made public on Sunday,
with some analysts saying regulatory approval was far from
certain.
    The company's shares had taken a beating in recent months
due to the impact of the Maui wildfires, high fuel costs and jet
engine recall issues at some of its Airbus SE  AIR.PA  planes.
Its shares have fallen 52.6% so far this year.
    Hawaiian presently has a negative price-to-earnings (PE)
ratio of 1.5, reflecting losses, compared to a positive forward
12 months PE ratio of 8.2 for Alaska Air, according to LSEG.
    Alaska and Hawaiian said on Sunday the deal, valued at
$929.4 million on an equity basis, will expand their networks
and offer more choices for passengers.
    "This transaction makes good common sense for both
airlines," TD Cowen analyst Helane Becker wrote in a note.
    The deal will enable Alaska to grow in the lucrative Asia
Pacific market, while Hawaiian customers can travel non-stop to
the U.S. mainland, Becker added.
    However, regulatory resistance to the merger is a
possibility. Under a hawkish Biden administration, the U.S.
Justice Department had filed a lawsuit in March to stop JetBlue
from buying Spirit Airlines  SAVE.N .
    JetBlue shares were up 1%, while Spirit shares were up 4.5%
on Monday before the bell.
    Alaska Air's CEO Ben Minicucci in an interview on Sunday
expressed confidence regulators would approve the deal by the
end of 2024 because the two airlines overlap in just 12 of the
1,400 flights they collectively operate. 
    Shares of Seattle-based Alaska Air were down 9.36% before
the bell.

 (Reporting by Ananta Agarwal in Bengaluru; Editing by Krishna
Chandra Eluri)
 ((Ananta.agarwal@thomsonreuters.com;))