Alaska Air Group, Inc. (NYSE: NYSE:ALK) has shared an update on its pending acquisition of Hawaiian Holdings (NASDAQ:HA), Inc., as the review period set by the Department of Justice (DOJ) expired on Monday, without further extension.
The development marks a significant step towards the completion of the merger agreement, which was initially announced on December 2, 2023.
The merger, which will see Hawaiian Holdings become a wholly owned subsidiary of Alaska Air Group, is still subject to the approval of the U.S. Department of Transportation (DOT). Both airlines are working cooperatively with the DOT and have submitted a joint interim exemption application, which is currently under review.
The DOJ had previously requested additional information and documentary material from the two companies, triggering a 90-day review period that began on May 7, 2024, following their certification of substantial compliance.
This period was initially set to expire on August 5, 2024, but was subsequently extended several times, with the last extension pushing the deadline to August 20, 2024.
The conclusion of the DOJ's review period is a procedural step forward in the merger process, indicating that the DOJ has closed its investigation without further action. However, the transaction's consummation is pending the DOT's decision.
In parallel, Alaska Airlines has made a strategic investment in JetZero, a company developing a blended-wing body aircraft aimed at reducing fuel consumption by up to 50%. This initiative aligns with Alaska Airlines' commitment to sustainability and its objective of achieving net-zero carbon emissions by 2040.
Moreover, Alaska Airlines reported strong second-quarter results, with a GAAP net income of $220 million and an adjusted net income of $327 million. The company's revenue was significantly bolstered by nearly $1 billion from premium segments.
InvestingPro Insights
As Alaska Air Group (NYSE:ALK) advances toward the completion of its acquisition of Hawaiian Holdings, investors are keenly observing the company's financial health and market performance. According to InvestingPro data, Alaska Air Group's market capitalization stands at $4.41 billion, with a P/E ratio of approximately 19.67. Notably, the adjusted P/E ratio for the last twelve months as of Q2 2024 is 9.2, reflecting a more attractive valuation relative to near-term earnings growth. The PEG ratio during the same period is 0.45, suggesting potential for growth at a reasonable price.
Despite recent stock price volatility, with a 20.35% decline over the last three months, analysts are optimistic about the company's prospects. InvestingPro Tips highlight that net income is expected to grow this year, and the company is predicted to be profitable, as evidenced by its performance over the last twelve months. This is particularly relevant for investors considering the potential synergies and market expansion resulting from the merger with Hawaiian Holdings.
For those seeking a deeper analysis, InvestingPro offers additional insights, featuring a total of 9 InvestingPro Tips for Alaska Air Group, which can be explored in detail at: https://www.investing.com/pro/ALK. These tips provide a comprehensive look at the company's financial position, including considerations such as debt levels and liquidity, which are crucial for assessing the risks and rewards associated with the pending acquisition.
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