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<\/span><\/a>Market reaction to the acquisition<\/span><\/h2>\n\n\n\n
On 4 December 2023, the day following the release of the acquisition news, Alaska Air Group Inc. stock lost 15.83%, dropping from 39.80 to 33.50 USD per unit. The stock reaction is understandable: investors view this decision as an additional risk to the company.<\/p>\n\n\n\n
This entails the risks of a failed deal at the initial stages and onward potential challenges in integrating the acquired company into the existing business, along with associated financial costs. Subsequently, there is a possibility of facing risks such as potential losses, a decline in client loyalty, and, consequently, a decrease in market share.<\/p>\n\n\n\n
$\"Alaska$ <\/a>
Alaska Air Group Inc. stock response to the acquisition news<\/em><\/figcaption><\/figure>\n\n\n\n
Hawaiian Holdings Inc.'s share price skyrocketed 193.81%, climbing from 4.85 to 14.25 USD per unit. This significant response from investors can be attributed to the announced purchase price of 18 USD, which was considerably higher than the market price at that time. Nevertheless, it is important to note that the share value did not reach 18 USD. Investors may have concerns that the regulators might block the deal for antitrust reasons.<\/p>\n\n\n\n
$\"Hawaiian$ <\/a>
Hawaiian Holdings Inc. stock response to the acquisition news<\/em><\/figcaption><\/figure>\n\n\n\n<\/span><\/a>Profile of Alaska Air Group<\/span><\/h2>\n\n\n
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Alaska Air Group Inc. is a US airline specialising in passenger and air freight transportation, with subsidiaries including Alaska Air Inc., Horizon Air Industries Inc., and McGee Air Services.<\/p>\n\n\n\n
According to the company<\/a>, it operates 138 routes in North America, including 29 international destinations. As of November 2023, the fleet consists of 303 aircraft. Based on information<\/a> from Statista for February 2022 to January 2023, Alaska Air Group Inc. holds the fifth position among US airlines in domestic market share – 6.2%.<\/p>\n\n\n\n
As the Q3 2023 report<\/a> shows, operating revenue for January to September increased by 9.85% from the corresponding period in 2022, reaching a record 7.87 billion USD. Net profit soared by 558.33% to 237 million USD or 1.86 USD per share.<\/p>\n\n\n\n
According to Macrotrends<\/a>, the company’s debt increased from 9.34 billion USD in Q1 2020 to 11.07 billion USD in Q3 2023, with a debt-to-equity ratio of 1.01 – indicating an equal proportion of debt to equity. Based on Finviz data<\/a>, the business margin in the last 12 months exceeds 19%, enabling the company to generate net profit and buy back its shares.<\/p>\n\n\n\n
<\/span><\/a>Profile of Hawaiian Holdings<\/span><\/h2>\n\n\n
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Hawaiian Holdings Inc. owns Hawaii's oldest airline, Hawaiian Airlines, established in 1929. According to the company<\/a>, as of November 2023, its fleet includes 32 aircraft and operates flights to 31 destinations. Based on the information<\/a> from Statista for February 2022 to January 2023, the corporation holds a 1.9% share in the US market, ranking tenth by this indicator.<\/p>\n\n\n\n
Hawaiian Holdings Inc.’s report for Q3 2023 states that revenue for January to September rose by 7.17% compared to the statistics for the same period in 2022, reaching 2.04 billion USD, while net loss decreased by 16.12%, down to 159.31 million USD.<\/p>\n\n\n\n
As the Finviz data<\/a> indicates, the business margin is 3.56%, and the debt-to-equity ratio is 11.45. Based on these statistics, it can be presumed that the corporation may go bankrupt.<\/p>\n\n\n\n
This situation will likely deter stock market participants, preventing them from investing in the company and potentially negatively affecting its stock price<\/a>. Hawaiian Holdings Inc.’s shares have dropped from a high of 31 USD recorded in June 2021 to a low of 3.85 USD in October 2023, marking a decline of 87.6%.<\/p>\n\n\n\n
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<\/span><\/a>Strategic benefits of the acquisition of Hawaiian Holdings Inc. for Alaska Air Group<\/span><\/h2>\n\n\n\n
According to a presentation<\/a> from Alaska Air Group Inc. to investors on 3 December 2023, the acquisition of Hawaiian Holdings Inc. could provide the corporation with the following advantages:<\/p>\n\n\n\n
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Fleet<\/strong> g<\/strong>rowth:<\/strong> increase in the aircraft fleet from 302 to 365<\/li>\n\n\n\n
Passenger<\/strong> t<\/strong>raffic:<\/strong> 25% growth, reaching 54.7 million passengers<\/li>\n\n\n\n
Daily<\/strong> d<\/strong>epartures:<\/strong> 22% increase in daily flights<\/li>\n\n\n\n
Loyalty<\/strong> p<\/strong>rogram<\/strong>me<\/strong> m<\/strong>embership:<\/strong> 24% growth in the number of active participants in the loyalty programme<\/li>\n\n\n\n
Potential<\/strong> r<\/strong>evenue<\/strong> g<\/strong>rowth:<\/strong> an expected 27% increase in revenue<\/li>\n\n\n\n
Enhanced<\/strong> m<\/strong>arket<\/strong> p<\/strong>osition:<\/strong> strengthening market positions in the US<\/li>\n\n\n\n
Leadership in the Hawaii<\/strong> m<\/strong>arket:<\/strong> attainment of a leadership position in the Hawaii market, estimated at 8 billion USD<\/li>\n<\/ul>\n\n\n\n<\/span><\/a>Potential challenges and disruptions<\/span><\/h2>\n\n\n\n
As reported<\/a> by the Associated Press on 19 May 2023, the federal court in Boston annulled the partnership between American Airlines Group Inc. (NYSE: AAL) and Jetblue Airways Corporation (NYSE: JBLU). This decision was made because the deal could reduce competition levels in the aviation industry.<\/p>\n\n\n\n
According to the Associated Press, in November 2023, the Biden administration intervened in another deal<\/a> in this sector. The US Department of Justice approached the court to prevent JetBlue Airways Corporation from acquiring Spirit Airlines Inc. (NYSE: SAVE) for 3.8 billion USD, citing antitrust law violations.<\/p>\n\n\n\n
Given the information above, regulatory authorities may block the deal between Alaska Air Group Inc. and Hawaiian Holdings Inc. As observed, the Biden administration seeks to decrease consolidation in the aviation industry to maintain competition at previous levels.<\/p>\n\n\n\n
<\/span><\/a>Detailed stock analysis of Alaska Air Group<\/span><\/h2>\n\n\n\n
Due to the COVID-19 pandemic, Alaska Air Group Inc. shares hit a minimum of 20.00 USD in March 2020. Subsequently, the prices moved upwards and reached a high of 74.25 USD by April 2021. Since then, they have declined, and by 11 December 2023, they had approached the minimum values recorded in 2020.<\/p>\n\n\n\n
The chart shows a descending channel, within which the quotes are declining. They have nearly reached the channel's lower boundary, indicating oversold conditions and possible price growth. It is worth noting that the price is testing the support level around 33.00 USD. The combination of these factors may signal a potential rise in the stock's value towards the trendline and, if it breaks, towards the resistance level of 54.00 USD.<\/p>\n\n\n\n
However, in a negative scenario, the quotes might breach the 33.00 USD support level and likely trigger a price decline to 24.00 USD.<\/p>\n\n\n\n\n