Alaska-Hawaiian Merger Decision Delayed to Mid-August

(Bloomberg) -- Antitrust enforcers looking into Alaska Air Group Inc.’s plan to buy Hawaiian Holdings Inc. will take more time to decide on the proposed $1.9 billion deal.

The Justice Department and state attorneys general now have until Aug. 15 to determine whether to try to block the tie-up or allow it to move forward, according to a company regulatory filing Tuesday. The airlines had originally sought a decision by Aug. 5, but agreed to an extension. 

Justice Department officials remain divided internally over whether to file a lawsuit to block the deal given the small relative size of Alaska and Hawaiian compared to the US’s four major airlines, according to people familiar with the review. Federal officials have shared their potential reservations with state regulators who are also reviewing the transaction, said the people, who asked not to be identified discussing internal deliberations.

A Justice Department spokesperson declined to comment.

Hawaiian Holdings shares gained as much as 7.8% to $12.75 on Tuesday, the most since the deal was announced in December. The stock is still trading below Alaska’s $18-per-share cash offer.

The combination of Alaska and Hawaiian would capture more than 50% of Hawaii’s airline market, which has annual revenue of $8 billion, the carriers have said. But travelers in Hawaii would be able to reach more destinations through the combined networks, while creating a stronger competitor to the four largest domestic airlines that dominate the US market.

The agency opened an in-depth review of the transaction in February. The Biden administration has taken a tough stance on airline mergers, derailing a planned combination of JetBlue Airways Corp. and Spirit Airlines Inc. and breaking up a regional partnership between JetBlue and American Airlines Group Inc.

--With assistance from Yiqin Shen.

(Updates with additional details beginning in third paragraph.)

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