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Alaska Airlines modifies press release amid uncertainty over merger with Hawaiian Airlines

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Alaska Airlines modifies press release amid uncertainty over merger with Hawaiian Airlines
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At the beginning of the week, it appeared that Alaska Airlines' acquisition of Hawaiian Airlines had been cleared by the Department of Justice (DOJ) over antitrust concerns. All that remained was the Department of Transportation's signoff, which seemed likely to come quickly.

Hawaiian Airlines shares were trading at $4.86 before Alaska Airlines agreed to pay $18 per share for the company, plus assuming $900 million in debt. Hawaiian shares closed Thursday at $17.36, down slightly from Wednesday but still reflecting high certainty that the deal would close.

"The deal seemed likely, as long as the parties could find a compromise," an observer noted earlier this week. "There’s not a fundamental competition problem, and there wasn’t political clamoring against it. Hawaii politicians supported it, and labor unions didn’t actively oppose it. Alaska doesn’t compete today on inter-island routes, and the mainland – Hawaii market is highly competitive. There’s a zone of possible agreement."

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However, expectations shifted when it became clear that the DOJ had not simply approved the transaction without conditions. "I didn’t expect the Department of Justice to simply approve the transaction – there did seem to be a likelihood that they would insist on conditions, like service commitments on routes between the islands," another source commented.

The situation grew more complex after Alaska and the DOJ twice agreed to extend the statutory review period. This extension suggested ongoing negotiations rather than merely needing more time for review. "It is very odd that DOJ simply approved the deal after multiple delays rather than demanding anything in exchange," remarked an analyst.

Formally speaking, the DOJ has not 'approved' the deal yet; they can still challenge it even after closure by suing to break up a completed transaction during their review period.

In response to these developments, Alaska Airlines quietly altered its press release language from stating “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,” to “The time period during which the parties were prohibited from closing under the HSR Act has expired. The government’s review is ongoing.”

This change in language raises questions about potential securities fraud if DOJ sues to block the deal prior to closure, almost certainly leading to shareholder lawsuits. Despite this alteration in language, Hawaiian shares have not fallen in after-hours trading and remain well above $17 per share, indicating continued investor confidence that the deal will proceed.

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