Alaska Air Group (ALK.US) acquisition of Hawaiian Holdings (HA.US) has been approved by the US Department of Justice; Morgan Stanley is optimistic
1min read The US Department of Justice's antitrust review of the proposed merger of Alaska Airlines (ALK.US) and Hawaiian Holdings (HA.US) has expired without further challenge. Hawaiian Holdings rose 11.3% to a 52-week high of $17.75 on Tuesday, approaching the $18 offer made by Alaska Airlines last year. Morgan Stanley maintains an "overweight" rating on Alaska Airlines with a target price of $70.00.
Morgan Stanley analyst Ravi Shanker believes the deal will give Alaska Airlines a foothold in the market, with domestic and international demand likely to continue over the next few years. "This deal also gives Alaska a larger share of the premium market relative to its domestic business today, which we believe is one of the fastest growing (and possibly most elastic) parts of the industry today," Shanker noted. He also pointed to cargo and loyalty programs as additional opportunities.
The two airlines will maintain two separate brands on a single operating platform with headquarters in Seattle, led by Alaska Airlines CEO Ben Minicucci. One of the main rivals that could be affected is Southwest Airlines (LUV.US), as Alaska-Hawaiian offers 87 unique international destinations from Hawaii, compared to 35 for Southwest.
The proposed merger of Alaska Airlines and Hawaiian Holdings still needs approval from the US Department of Transportation.
As of publication, Alaska Airlines was trading up 0.74% at $35.23.