Dec 4 (Reuters) – Shares of Hawaiian Airlines parent Hawaiian Holdings (HA.O) rose after Alaska Airlines Group (ALK.N) agreed to buy the airline for $1.9 billion, including debt. The stock nearly tripled on Monday.
Hawaii shares were trading at $13.40 in morning trading, below Alaska’s offering price of $18 per share announced on Sunday, and some analysts said regulatory approval was not certain. He expressed the view that no.
The company’s stock has fallen sharply in recent months due to wildfires on Maui, rising fuel costs and a jet engine recall for some Airbus SE (AIR.PA) planes. The company’s stock price has fallen 52.6% since the beginning of the year.
According to LSEG, Hawaiian Airlines’ price-to-earnings (PE) ratio is currently -1.5x reflecting losses, while Alaska Airlines’ trailing 12-month P/E ratio is +8.2x.
A Hawaiian Airlines plane sits idle on the runway at Daniel K. Inouye International Airport due to business downturn due to the novel coronavirus disease (COVID-19), April 28, 2020 in Honolulu, Hawaii, United States. . The photo was taken on April 28, 2020.Reuters/Marco Garcia/File Photo Obtaining license rights
Alaska Airlines and Hawaiian Airlines said Sunday that the deal, worth $929.4 million in capital, will expand their networks and provide more choice for passengers.
“This transaction makes sense for both airlines,” TD Cowen analyst Helane Becker said in a note.
The deal will allow Alaska to grow in the lucrative Asia-Pacific market, while allowing Hawaii customers to travel nonstop to the U.S. mainland, Becker added.
Craig Jenks, president of Airline/Aircraft Projects, a New York-based aviation consultancy, said, “The extensive network synergies that the combined entity will achieve with minimal additional investment will make this deal a valuable asset.” The premium is justified.” 270% premium.
However, there may be regulatory resistance to the merger. Under the hawkish Biden administration, the U.S. Department of Justice in March warned that the planned merger would “put travel out of reach for many cost-conscious travelers,” including JetBlue’s Spirit Airlines (SAVE .N) had filed a lawsuit to halt the acquisition.
JetBlue shares were nearly flat from premarket, paring losses, while Spirit shares rose 6.5% on Monday.
Shares of Seattle-based Alaska Airlines fell 17.6%.
Reported by Ananta Agarwal and Shivansh Tiwary from Bangalore.Edited by: Krishna Chandra Eluri and Shinjini Ganguly
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