Alaska Airlines to acquire Hawaiian Airlines for $1.9B
Alaska Airlines announced plans Sunday to buy rival Hawaiian Airlines for $1.9 billion, saying the deal would unlock more destinations for consumers and expand choice of air travel throughout the Pacific region, continental United States and globally.
The second proposed passenger airline merger in less than two years could also be on track for a potential clash with the Biden administration, per USA Today
Alaska Air Group Inc., said it would keep the Alaska Airlines and Hawaiian Airlines brands “while integrating into a single operating platform” to offer passengers access to more flights and destinations across the Americas, Asia, Australia and the South Pacific.
“This combination is an exciting next step in our collective journey to provide a better travel experience for our guests and expand options for West Coast and Hawaii travelers,” said Ben Minicucci, Alaska Airlines CEO, in the announcement on Sunday.
Hawaii residents will have access to triple the number of North American destinations that can be reached nonstop or one stop from the Islands, the company said.
Just last week, Hawaiian Airlines started selling tickets for new nonstop service between Honolulu and Salt Lake City, with flight beginning May 15. It is also expanding service in Sacramento starting May 24.
Utah has one of the highest concentrations of Pacific Islanders in the country with about 60,000 residing in the state. Salt Lake City becomes Hawaiian Airlines’ 16th gateway city in the continental U.S., the most of any carrier serving the islands, according to a Hawaiian Airlines press release.
Passengers on West Coast and across the Pacific will have more choice and increased connectivity across both airlines’ networks, with service to 138 destinations including nonstop service to 29 international destinations , according to the two carriers.
Related
The transaction agreement has been approved by both company’s boards and is expected to close in 12 to 18 months, pending approval by regulators and Hawaiian’s shareholders. Alaska Airlines would pay $18 a share for Hawaiian and would take on $900 million of its debt. The combined organization would be based in Seattle.
Hawaiian Airlines has struggled with challenges including the Maui wildfires, competition from Southwest Airlines, which has ramped up service in Hawaii in recent years, and a lagging recovery of travel to and from Asia after the pandemic. Hawaiian posted net losses in all but one quarter since the start of 2020, while Alaska and other carriers have returned to more solid financial footing as the pandemic waned, per CNBC.
“What we saw here was a unique opportunity in time at the valuation that we saw Hawaiian at,” Shane Tackett, Alaska Airlines CFO, told CNBC in an interview. He said the deal would also enable the combined companies to become a “market leader” in the premium-travel Hawaii market.
According to CNBC, carriers have faced strong opposition from President Joe Biden’s Justice Department when they have argued that they need to pair up to better compete with larger rivals. Earlier this year, the Justice Department won a lawsuit to break up a regional partnership in the Northeast between JetBlue Airways and American Airlines.
The Justice Departments also sued to block JetBlue’s proposed acquisition of discount carrier Spirit Airlines. A trial is expected to wrap up in the coming days.
Four airlines — American, United, Delta and Southwest — control about 80% of the U.S. market, consolidation that resulted from years of mergers.
