Alaska Air downgraded to Hold at Melius Research after Hawaiian Airlines deal

Melius Research downgraded Alaska Air (ALK) to Hold from Buy with an unchanged price target of $43. When the firm started to sketch out its 2024 outlook a couple weeks back, Alaska was “setting up as one of the better (if not the best) US domestic airlines,” the analyst tells investors. However, since then, the company announced it would purchase Hawaiian Holdings (HA) for $1.9B in cash. While strategically the purchase makes sense and the firm suspects that when looking back on the purchase of Hawaiian by Alaska “come 2027 the market will like it,” there is a long road to recovery at Hawaiian and the complexity of airline mergers is “a lot to handle in an already challenging environment for the airlines,” the analyst argues.