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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 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.
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)
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