In what is becoming a strangely endless number of turns and twists associated with Alaska Airlines’ acquisition of Hawaiian Airlines, Alaska, just made a subtle but perhaps revealing change. Also, the government may have indicated something totally unexpected. They may, in fact, not be done with their approval or rejection of the Alaska/Hawaiian Deal. The lack of clarity is surprising at best.
Also particularly relevant to the merger, Alaska Airlines just changed the language in this weeks earlier press release. The revision seems to align with an awareness of a previously stated FTC’s position on mergers and the potential risks of moving forward without a definitive conclusion from the regulatory authorities.
These latest twists also bring to mind that the Department of Justice antitrust attorney, previously involved in blocking the JetBlue-Spirit merger, was recently approved to appear in federal district court in Honolulu. Why? While this move initially suggested that federal regulators were gearing up for a more active role in scrutinizing the deal, after that, no further action materialized. Or at least it hasn’t yet.
Why did Alaska “quietly” change its messaging on the deal’s approval?
A subtle yet significant unannounced change in Alaska Airlines’ press release after it was published this week has made the situation more ambiguous.
Here is the original language on the Alaska press release: “The time period for the U.S. Department of Justice to complete its regulatory investigation of the proposed combination of Alaska Airlines and Hawaiian Airlines under the HSR Act has expired…”
And here is Alaska’s revised language: “The time period during which the parties were prohibited from closing under the HSR Act has expired. The government’s review is ongoing.”
While initial reports from a plethora of sources, started by Alaska Airlines and followed by BOH, suggested the merger had cleared the DOJ’s major regulatory hurdles, that may or may not have been true.
FTC’s Position: no implied approval of the Alaska/Hawaiian deal.
In 2021, the Federal Trade Commission (FTC) issued guidance indicating that the expiration of a statutory review period, such as the one that ended in this deal on Monday, should not be construed as tacit approval of a merger by the Department of Justice (DOJ).
This clarification has become particularly relevant in the context of the Alaska Airlines-Hawaiian Airlines deal. The FTC emphasized that even if a review period expires without formal objection, the government retains the authority to challenge the merger at any point before or after it is finalized.
This nuanced position from the DOJ complicates the narrative around this airline deal. The original language in Alaska Airlines’ press release seemed to imply that the DOJ had effectively given Alaska the green light to proceed by allowing the review period to lapse.
However, the revised language now reflects the ongoing nature of the government’s review, subtly acknowledging that the merger is not yet fully cleared. Alaska’s change in language appears to be in direct correlation to this FTC position.
The FTC adjusted its process for reviewing mergers due to a surge in filings. FTC Bureau of Competition Director Holly Vedova noted that for deals not fully investigated within the timelines required by the Hart-Scott-Rodino (HSR) Act, the FTC has begun issuing standard form letters to companies. These alert companies that the FTC’s investigation remains open and remind them that the agency may later determine the deal to be unlawful. We can’t say whether Alaska received such a letter.
“Companies that proceed with transactions without a full investigation do so at their own risk, as the FTC may later seek to undo the transaction.”
Federal Trade Commission.
Investor sentiment and revealing stock market reaction.
Despite these legal uncertainties, investor sentiment remains optimistic about the merger’s prospects. This is evidenced by stock market behavior since yesterday. After a Seeking Alpha article drew attention to the modification of the press release, Hawaiian Airlines’ stock dropped by over 5%, which we’ll point out was not a huge swing compared with others revolving around this deal. However, the stock has since fully rebounded, indicating reflecting that investors still believe the deal will proceed despite the odd and lingering uncertainties.
The path forward remains uncertain for now.
As Alaska and Hawaiian navigate this changing and uncertain regulatory landscape, much will depend on the government’s next steps, if there even are any. The altered language in Alaska’s press release could be seen as a merely a highly precautionary measure, ensuring the company’s compliance with FTC guidelines and yet signaling confidence in the deal’s future.
The potential for a DOJ challenge of the Hawaiian/Alaska deal still looms. If the deal is blocked or conditions are imposed, for reasons BOH already suggested, it could lead to significant ramifications.
We welcome your courteous input.
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IMO does Maui stand for Mixedmessages Addressed Under Isolation or Mixedmessages Assessed -U- Idiot.
Just like the Maui deal. Welcome not welcome. Come don’t come. Just keep the tourist guessing. Do I use my Hawaiian miles or not
Do I now need an Alaska Airline credit card for Alaska points?IMO I guess the airlines are messing with locals with inter-island flights.
Can Hawaiian’s say Karma? How does it feel when the tables are turned? Glad you can feel the real Aloha Spirit.
Agree, complete mix messaging from the powers that be. Just like Maui government, come but don’t come. Welcome but not welcome. Confusing the tourist. You think if a family has one big vacation a year, they are going to go to Maui where there is risk of locals giving them grief for coming? That is not the case, as I have been back 8 times since the fires & I have family on Maui. But that is the messaging from the local government. We need the tourists more than ever to support the locals.
“All is not as it seems here”… There is obviously ongoing, powerful, but probably non governmental agency resistance here – union or political – probably both as intertwined as they are…
Best Regards
I hope the doj does a jetblue on this very anticompetive merger which once approve would see many ha flights out of thd pnw go bye bye if the long haul routes arent super profitable then those will be gone and 787 sold off and have to fly the max death plane. You just have look at the disappearence of virgin and how as rolls in ak to see they want to monploy at least btw pnw and ha.
I think the joker in the deal is pattg murray as #2 in senate she has the power to push the deal throug.
The alternative is Bankruptcy. Remember Aloha?
Aloha!
In which case, you can kiss Hawaiian good bye inside a year… they are on the brink of Bankruptcy … then Southwest would have a monopoly on inter island.. think before you type man.
Typical government which provides minimal transparency & clarity. The acquisition would be a great thing for HA as they are in financial trouble. Alaska has a much better balance sheet and could absorb all of the HA debt. There are plenty of airlines that fly into the islands so not sure what anti-competitive situation they are referring to.
Really theres like never a $100 ow fare out of seatac to any island yet these are very common in ca mkt. Fares btw pne and ca where way cheaper when they had to compete with virgin but once that airline disapperared (planes sold off and ca flights reduced) like 2..3x more expensive. Yeah anyone with half a brain would see this is not going to be good for travelers in terms of affordable fares and having to fly thevmax death plane over one of the longesg sgreach of open wated and rough seas in the world.
I find it interesting that the airlines didn’t know about the HSR before issuing its statements. It must have been that the rule at the FTC is buried under some administrative authority that is rarely read because the situation never comes up. The amendment is also to comply with FTC regulations about public corporate communications on issues like this and to not misinterpret events from the DOJ/DOT on this merger. Words, as said once, retain power, and subtle changes in phrasing, in this high-stakes game, are even more powerful.
Perhaps the long timeline to an official final verdict might extend into the next administration, which is why everyone is keeping their options open?
Feels like a rollercoaster. The way Alaska Airlines changed their press release wording is weird, to say the least.
This is nuts. If the FTC is warning about proceeding at their own risk, why is there still such a high expectation that the deal will still go through?
Something doesn’t add up.
Wait so does this mean the DOJ hasn’t approved the deal yet, or are they just keeping options open? It feels like they’re trying to keep everyone on their toes.
Honestly, I think this whole situation is just a formality. The market seems confident, and I believe the merger will go through eventually. But the uncertainty is exhausting.
Sorry but I’m stumped by all this back and forth. First, we hear the deal is moving forward, then it’s not? The DOJ stepping in, then stepping out.