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

Hawaiian Holdings

04/12/2023 15:47

(Updates shares, adds graphics)
    By Ananta Agarwal
       Dec 4 (Reuters) - Shares of Hawaiian Holdings  HA.O ,
the parent of Hawaiian Airlines, nearly tripled on Monday after
Alaska Air Group  ALK.N  agreed to acquire it for $1.9 billion,
including debt.
    Hawaiian shares were trading at $13.40 in morning trade,
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 to 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 , saying the planned merger
"would put travel out of reach for many cost-conscious
travelers".
    JetBlue shares pared losses from premarket to trade flat,
while Spirit shares were up 6.5% on Monday.
    Alaska Air's CEO Ben Minicucci in an interview on Sunday
expressed confidence that regulators would approve the deal by
the end of 2024 because the two airlines have just 12
overlapping routes out of the 1,400 flights they collectively
operate. 
    Shares of Seattle-based Alaska Air were down 17.6%.

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Budget carriers stock performance    https://tmsnrt.rs/47S85x8
Hawaiian Holdings losses over the years    https://tmsnrt.rs/46O7RWF
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 (Reporting by Ananta Agarwal in Bengaluru; Editing by Krishna
Chandra Eluri and Shinjini Ganguli)
 ((Ananta.agarwal@thomsonreuters.com;))