Alaska Airlines merger talk lifts stock price of a popular airline

At the end of last year, Seattle-based Alaska Airlines ( ALK ) announced its intention to acquire the airline serving another non-mainland state — Hawaiian Airlines — in a deal valued at approximately $1.9 billion or $18 per share.

But a collaboration between two such airlines immediately outraged those concerned of its potential to create an anti-competitive environment. In February 2024, a federal judge blocked JetBlue ( JBLU ) 's plans to acquire Spirit Airlines ( SAVE ) over concerns that the merged airline would raise prices while leaving travelers with few other options to choose from and many analysts wondered whether Alaska would suffer the same fate.

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But on April 12, Hawaii's Chief U.S. District Judge Derrick Watson threw out a passenger antitrust lawsuit on grounds that "vague and conclusory statements" are not enough to "establish a concrete and particularized injury."

Several hints indicate that the Alaska-Hawaiian merger may be going forward

In further indication that a major announcement on the deal may be near, Alaska Airlines announced that the U.S. Department of Justice (DOJ) agreed to extend the review period set to end on August 15 by an additional 24 hours — suggesting, in turn, that last-minute discussions may be taking place and the extra time may be decisive.

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"We continue to believe this combination will enable a stronger platform for growth and competition in the United States, long-term job opportunity for employees, and continued investment in local communities and environmental stewardship," Alaska Airlines said, while adding that it "will continue to cooperate with the DOJ in this review process."

Hawaiian Airlines stock soared upon the news and has been up by more than 16% at $14.58 from August 9 and is up 3.73% on August 14.

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This is what's happening with Alaska shares now

Alaska Air Group stock, meanwhile, reacted by jumping more than 5% on Tuesday before falling again to $34.81. The stock is down nearly 10% year-over-year after struggling with rising fuel costs and the January 2024 in-air panel blowout that caused Boeing ( BA ) to ground the 737 Max 9 planes.

Both Alaska and Hawaiian have argued that the merger would allow them to create a joint network that would connect more passengers in remote parts of those states to different destinations across the mainland U.S. Given that many of the airlines' frequent flyers already have a limited pool of options to choose from, the antitrust concerns that killed the JetBlue-Spirit merger were found not to apply in this case.

The deal would also allow Alaska to take on approximately $900 million of Hawaiian's debt and rescue the struggling airline from having to take drastic action on its finances later on.

The final say on whether Alaska and Hawaiian will be permitted to merge will rest with the DOJ which generally does not comment on pending decisions.

"Our deal is completely different," Alaska Airlines CEO Ben Minicucci said in a statement in the spring of 2024. "We're actually the low-cost, low-fare airline acquiring Hawaiian." This time, the airline also said that it expects the merger to "expand benefits and choice for consumers."

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