Roth/MKM Comments on Alaska Air Group (ALK) and Hawaiian Holdings (HA)

Roth/MKM Comments on Alaska Air Group (NYSE: ALK) and Hawaiian Holdings (NASDAQ: HA).

The analyst comments "While the transaction initially appears less problematic in some ways relative to the pending Spirit/JetBlue combination, as the deal does not eliminate an ultra-low-cost carrier, the 12-18 month timeframe for closing is likely justified. Although the companies are emphasizing the small number of city-pair overlaps (12), few other airlines compete on several of the routes (and in some cases, Hawaiian and Alaska are the only airlines offering non-stop service on the routes). Additionally, we will continue to explore whether there could be considerations related to the airlines’ codesharing arrangements; in the Virgin America/Alaska deal, the DoJ required Alaska to reduce the scope of the arrangement, but Alaska has since expanded the agreement and also joined the oneworld Alliance. The merger agreement provides for Alaska to undertake certain commitments detailed in a disclosure schedule if required to obtain regulatory approval. In discussing the background, the parties noted that they were in discussions early this year, and then Alaska approached Hawaiian with an offer a few months ago."

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