Hawaiian Airlines and Alaska Airlines Merger Faces DOJ Scrutiny

Hawaiian Airlines and Alaska Airlines have taken a significant step in their merger process by agreeing with the Department of Justice (DOJ) not to finalize their merger until they have fully complied with a second request for information concerning antitrust issues. This agreement, which includes a 90-day review period post-compliance, underscores the thorough scrutiny mergers undergo to ensure they do not harm competition or consumer interests. This development is crucial as it highlights the airlines' commitment to transparency and cooperation with regulatory bodies, a vital aspect of such significant corporate actions.

Hawaiian Holdings Inc. (HA:NASDAQ), the parent company of Hawaiian Airlines, presents an interesting financial profile amidst this regulatory review. With a price-to-sales ratio (TTM) of about 0.25, the company's stock is trading at a value that is a quarter of its sales over the past twelve months. This low ratio could indicate that the stock is undervalued or that investors are cautious about the company's future revenue prospects, especially in the context of the ongoing merger discussions and the regulatory hurdles they entail.

Furthermore, Hawaiian Holdings Inc.'s enterprise value to sales ratio (TTM) stands at approximately 0.94, suggesting a moderate valuation of the company in relation to its sales. This metric offers a broader perspective on the company's valuation by considering its debt and cash levels, providing investors with a clearer picture of what the company might be worth in the event of a buyout or merger. This is particularly relevant as the company navigates through the complexities of merging with Alaska Airlines, where valuation plays a critical role in negotiations and regulatory assessments.

The company's current ratio (TTM) of 1.02 indicates a stable financial position in terms of liquidity, showing that it has just enough resources to cover its short-term liabilities with its short-term assets. This is an essential indicator of financial health, especially in an industry known for its volatility and high operational costs. However, Hawaiian Holdings Inc.'s debt to equity ratio (TTM) of approximately 17.55 paints a picture of a company that is heavily leveraged, with a significant amount of debt compared to its equity. This high level of debt could be a concern for investors and regulators alike, as it may impact the company's flexibility and financial stability in the long run, especially in the face of the additional scrutiny and potential financial commitments arising from the merger process.