Alaska Airlines has reached an agreement to acquire Hawaiian Airlines for $1.9 billion, including $900 million of the airline’s net debt.
According to Sunday’s announcement, Alaska Airlines will acquire Hawaiian Airlines for $18 per share in cash.
The airlines say the deal will open additional destinations throughout the Pacific, the mainland United States and worldwide.
The transaction is expected to generate high single-digit earnings growth for Alaska Airlines within the first two years without any significant impact on long-term balance sheet metrics.
“This combination is an exciting next step in our shared journey to deliver a better travel experience for our guests and expand options for travelers on the West Coast and Hawaii,” said Ben Minicucci, CEO of Alaska Airlines.
Alaska Air has reached an agreement to acquire Hawaiian Airlines for $1.9 billion, including $900 million of the airline’s net debt
The combined organization will be based in Seattle, while Honolulu will become a major hub for Alaska Airlines
He added, “We have long had great respect for Hawaiian Airlines, for its role as a top employer in Hawaii and for how its brand and employees spread the warm Aloha culture around the globe.”
The combined organization, under Minicucci’s leadership, will be based in Seattle and Honolulu will become a major hub for Alaska Airlines.
A press release announcing the deal touts a “stronger platform for growth and competition in the U.S.” as well as “long-term employment opportunities for employees, continued investment in local communities and environmental protection.”
The combination of complementary domestic, international and cargo networks will provide consumers on the West Coast and throughout the Hawaiian Islands with greater choice for the airlines’ combined 54.7 million annual passengers.
The deal provides expanded service to residents of the 50th state and triples the number of destinations across North America that can be reached nonstop or with one stop from the islands.
It also promises more opportunities for career advancement, competitive wages and benefits, and geographic mobility for employees.
In a statement, the nation’s largest flight attendant union, the Association of Flight Attendants-CWA, which represents 6,800 Alaskan and 2,200 Hawaiian flight attendants, said it wanted to ensure the merger would improve conditions for flight attendants.
The International Association of Machinists and Aerospace Workers (IAM) expressed similar views.
“Our members at Alaska and Hawaiian Airlines are rightly proud of the work they have done to make these airlines successful,” said Mike Klemm, IAM District 141 president and executive chairman.
“We will deploy all necessary resources to ensure their livelihoods are protected during this takeover.”
In operation for 95 years, Hawaiian Airlines is the state’s largest airline with approximately 150 daily interisland flights and nonstop flights between Hawaii and 15 U.S. gateway cities, as well as flights to American Samoa, Australia, the Cook Islands, Japan, New Zealand , South Korea and Tahiti.
Hawaiian Airlines President and CEO Peter Ingram is committed to “doing more for our guests, employees and the communities we serve.”
“With Alaska Airlines, we are joining an airline that has long served Hawaii and has a complementary network and shared service culture. With the additional scale and resources this transaction with Alaska Airlines brings, we can accelerate investments in our guest experience and technology while maintaining the Hawaiian Airlines brand.”
The deal would be the second airline merger in just over a year and is likely to be subject to scrutiny from regulators. It comes at a time when the Biden administration is aggressively challenging such deals across a wide range of industries dominated by a small number of players. (FIX)
Last year, Frontier Airlines and Spirit Airlines negotiated a merger that fell through, setting the stage for Spirit to be acquired by JetBlue.
JetBlue won a bidding war to buy Spirit for $3.8 billion. However, the Justice Department filed an antitrust lawsuit in federal court in Massachusetts in March.
The lawsuit argues that JetBlue’s plan to eliminate Spirit and consolidate its aircraft, routes and employees into its own operations would harm consumers who rely on Spirit’s low fares to afford air travel.
“We contend that this merger, if approved, will restrict choice and drive up ticket prices for passengers across the country,” Attorney General Merrick Garland said at a news conference.
“And we continue to contend that the impact of this merger will be particularly damaging to travelers who rely on so-called ultra-low-cost carriers to fly.”
The DOJ considers Spirit an industry “disruptor,” alleging that its discounted fares have caused other airlines — including JetBlue — to cut fares on competing routes.
“JetBlue’s plan would eliminate the unique competition offered by Spirit – and about half of all ultra-low-cost airline seats in the industry – and leave tens of millions of travelers facing higher fares and fewer options,” it said of the complaint.