The following is the transcript of a television segment discussing the pending acquisition (the
“Transaction”) of Hawaiian Holdings, Inc. (“Hawaiian Holdings”) by Alaska Air Group, Inc. (“Alaska”) posted to the Transaction website on December 26, 2023.
CNBC: The Alaska-Hawaiian Airlines deal isn’t like other deals the DOJ has challenged: Peter Mucchetti
Air date: December 5, 2023
Speakers:
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Andrew Ross Sorkin – Financial columnist, The New York Times and a
co-anchor of CNBC’s Squawk Box |
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Peter Mucchetti – Partner, Clifford Chance and former antitrust attorney at the DOJ
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Andrew Ross Sorkin: Shares of Hawaiian Air parent Hawaiian Holdings nearly tripled on Monday while shares of Alaska Air fell by
16 percent. The move coming after news of Alaska Air’s deal to buy the smaller rival, Hawaiian Air. Now joining us to discuss what is the regulatory pushback, or at least what the market seems to think will be, on that merger, Peter
Mucchetti. He’s a Partner at Clifford Chance and a former antitrust attorney at the Department of Justice. Let’s just ask it straight up, you handicap this deal of happening, you think you – what are the chances?
Peter Mucchetti: You know I think the parties have a lot to work with here, this isn’t like other transactions that the Justice Department has
challenged. Here you have two airlines, that yes, they’re both on the West Coast, they do serve some of the same routes, but for the large part they actually serve different routes. The parties themselves are saying they only overlap on about
three percent of their transactions. So that really gives the parties the opportunity to say, this transaction is good for passengers because we’re going to be a better competitor to the big four, we’ll have a better loyalty program,
we’ll achieve efficiencies, and we’ll pass on some of those cost savings to passengers. On the other hand, certainly the parties are settling in for a long investigation. They’re saying that it’s going to be 12 to 18 months
before they can close the transaction.
Andrew Ross Sorkin: Bill, where do you land on the larger picture of consolidation in the airline business?
I don’t know if you – there was a fascinating piece, Tim Wu, who’s been on the program many times, had an op-ed in The New York Times just yesterday I think, the last – well 48 hours –
and made a very compelling argument that there has been too much consolidation in the airline business. That even though prices, maybe on an inflation adjusted basis, have either remained the same or even gone down, that when you factor in service,
when you factor in the size of the seats, when you factor in what you used to get, the fact that you could bring your luggage with you. All of those things have made it worse. Do you agree or disagree?
Peter Mucchetti: Well absolutely, there’s a lot of concern in the airline industry. You’ve got the big four: United, American, Delta and
Southwest, and there has been consolidation across the decades. You know, U.S. Airways American Airlines was a big transaction, and all of these transactions are highly scrutinized. Tim Wu, you know, very influential in antitrust circles and
certainly you see the Biden administration being very aggressive in merger enforcement. In fact, right now a trial is wrapping up in Boston where the Justice Department is challenging JetBlue’s proposed acquisition, of Spirit Airlines and
that’s because there is this concern. But what Alaska and Hawaiian are going to say is: our transaction is not like all those other transactions, you got to look at the specific facts and where we operate, and that’s certainly what the
Justice Department will do along with the state Attorney General.