ALK - Wall Street Breakfast Podcast: Alaska Air Acquiring Hawaiian Airlines

2023-12-04 06:41:58 ET

Summary

• Alaska Air to acquire Hawaiian Airlines in a $1.9 billion deal.
• Boeing eliminated from Air Force competition for developing a successor to the E-4B Nightwatch plane.
• China Evergrande's court hearing for liquidation petition pushed to January.

Listen below or on the go on Apple Podcasts and Spotify

Alaska Air (ALK) to buy Hawaiian Airlines (HA) in $1.9B deal. (00:23) Boeing (BA) eliminated from Air Force ' doomsday plane ' competition. (01:08) China Evergrande (EGRNQ) winding-up hearing pushed to January. (02:08)

This is an abridged transcript of the podcast.

Alaska Air (NYSE: ALK ) said Sunday it agreed to acquire Hawaiian Airlines ( HA ) for $18/share in cash, valuing the transaction at ~$1.9B including debt .

The companies said the combination of complementary domestic, international and cargo networks would enhance competition and expand choice for consumers on the U.S. west coast and the Hawaiian Islands.

Alaska Air ( ALK ) said $235M of expected run-rate synergies reflect a conservative estimate of the deal's synergy potential.

The company also expects the deal will generate high single digit earnings accretion within the first two years and high teens thereafter. It expects mid-teens return on investment capital by year three.

Boeing (NYSE: BA ) said Friday it was eliminated by the U.S. Air Force from the competition to develop a successor to the E-4B Nightwatch "doomsday plane," Reuters reported.

This leaves privately-held defense contractor Sierra Nevada as the only known company seeking the contract.

Boeing ( BA ) and the Air Force reportedly could not reach an agreement on data rights or contract terms, with the company unwilling to sign any new fixed-price agreement that locks it into paying costs above an agreed limit, after it suffered billions of dollars in losses in recent years on fixed-price development programs that include NASA's Starliner and the next Air Force One.

The Air Force currently operates four E-4B aircraft with at least one on alert at all times; the fleet of highly-modified Boeing ( BA ) 747-200 jumbo jets date to the 1970s.

The planes have become increasingly difficult and expensive to maintain as parts become obsolete.

China Evergrande ( OTC:EGRNQ ) said on Monday that the court hearing for a liquidation petition has been postponed again , this time to January 29.

The ruling was made after the struggling real estate developer requested an adjournment, with no objection from the petitioner's attorney. This would give Evergrande ( OTC:EGRNQ ) more time to complete a revised debt restructuring package.

Evergrande ( OTC:EGRNQ ) had proposed transitioning offshore bondholders' debts into a 30% equity stake in each of its units, Evergrande Property Services ( OTC:EVGPF ) and Evergrande New Energy Vehicle Group ( OTC:EVGRF ).

Evergrande ( OTC:EGRNQ ) shares jumped 9% on the Hong Kong stock exchange on Monday after the announcement.

Evergrande ( OTC:EGRNQ ) defaulted on offshore debt in late 2021 and is said to be the world's most indebted developer with more than $300B in liabilities.

Other articles to look out for on Seeking Alpha:

New highs: Gold sets another record, bitcoin crosses $41K as rate cut bets grow

Spotify to lay off 17% of employees to curb costs

Piper sees GLP-1s increasing demand for knee/hip surgeries near-term

Weight loss drugs seen providing a boost to apparel stocks - Stifel

On our catalyst watch for the day,

• BetMGM will host a business update call. The sports betting company is jointly owned by MGM Resorts ( MGM ) and Entain plc ( OTCPK:GMVHF ).

U.S. stocks ended higher on the first day of December.

Wall Street's three major averages hit session lows shortly after Powell's prepared remarks ahead of a fireside chat at Spelman College. The Fed chair said that it was still "premature to conclude with confidence" that the central bank had achieved a sufficiently restrictive monetary policy stance.

However, more positive speak during the chat helped the indexes climb back up, after which they held steady in the green. The Nasdaq ( COMP.IND ) added 0.55%. The S&P 500 ( SP500 ) climbed 0.59%, while the Dow ( DJI ) advanced 0.82%.

Treasury yields deepened their losses after Powell’s remarks. The 10-year yield ( US10Y ) was down 14 basis points to 4.21%. The 2-year yield ( US2Y ) slid 16 basis points to 4.55%.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the red. The Dow is down 0.2%, the S & P 500 is down 0.3% and the Nasdaq is down 0.4%. Crude oil is down 1.4% at more than $73 per barrel. Bitcoin is up 6.1% and above $41,800.

In the world markets, the FTSE 100 is down 0.3% and the DAX is up 0.1%.

The biggest movers for the day premarket: Uber Technologies (NYSE: UBER ) is up 4% and Jabil ( JBL ) is up 3 .1% after the stocks were included in the list to join the S&P 500 Index , effective prior to the start of trading on December 18.

On today’s economic calendar:

10 am The October Factory orders report will be released. Economists expect a 2.6% decline to be announced.

For further details see: