Originally Posted by
The Situation
The DOJ has not filed suit yet and so there will not be any court filings proclaiming a settlement. Tonight's deadline is for the DOJ to decide whether to allow the merger to proceed or not. If the DOJ does not bless the merger, then litigation will be filed and it's a fairly high probability that the deal falls apart. If they do allow the merger to proceed, I would assume some very significant concessions that really would make one question the value of the deal. The additional amount of time is not only to negotiate concessions, but also calculate whether the deal still makes sense with those concessions. The price paid for HA was already questionably steep and would not have factored in the types of concessions that are being negotiated. They would have assumed that they would have had to keep some routes and frequencies for a period of time - they would not have factored in divesting space at SEA as others have speculated and that significantly reduces the value of the merger.
1. I am having difficulties understanding the SEA divestment rationale; DL made a big, unsuccessful push to challenge AS in SEA, State of Alaska; AA had grandiose plans to provide TPAC service out of SEA, partnering with AS, also failed; WN already has a presence in both SEA and PHX.
2. All major carriers offer robust mainland US-Hawaii flights, have been cutting back on capacity, combined AS-HA will not have the ability to disrupt pricing.
3. ALK should have expected some conditions related to inter-island service: open code-shares, minimum levels of service would not be a surprise to anyone. WN will have to stop burning cash at some point, but keep AS-HA honest if fares jump too much.
4. Longer term, DL and UA have the most to lose TPAC, as ALK repurposes HA A330s and 787s, leveraging the OW network. This should have the effect of adding competition, reducing prices for consumers, which should be music to regulator's ears. This is where I could see competing lobbyists attempting to exert pressure, with little to no success.