The pending $1.9 billion deal would see the combined carrier continue to operate under both airlines’ brands >>
Alaska Airlines has reached an agreement to buy Hawaiian Airlines for $1.9 billion in stock and debt. The companies announced Sunday that Alaska would pay $18 in cash for each share of Hawaiian, and would take on $900 million in Hawaiian debt.
The deal, which has received the green light from the boards of both companies still needs to be approved by the shareholders of Hawaiian Holdings. In addition, the combination faces regulatory approval from a Biden administration Justice Department which has taken a harder line toward mergers and acquisitions, particularly in the airline industry.
While the rest of the airline industry has enjoyed a post-pandemic travel boom, Hawaiian Air has posted net losses in all but one quarter since the start of 2020. The carrier faced a slow return of Asian traffic, exacerbated by increased competition from Southwest Airlines and the drop in tourism caused by the Maui wildfires.
“This is a fantastic deal that bring two airlines that have amazing loyalties in our regions together,” said Alaska CEO Ben Minicucci, who would head the combined company. The acquisition was the culmination of “several months” of negotiations
In an unusual move, the combined company, which would be headquartered in Seattle, said it would operate under both airline brands as a single platform. Additionally, the combination would make Honolulu a major hub for the airline, bringing Hawaiian’s long-haul Asia network under Alaska’s umbrella.
“The Hawaiian brand will remain an important part of our home state with Honolulu becoming a strategic hub for the combined company and expanded service for Hawaii residents,” Hawaiian CEO Peter Ingram said on a call with investors.
During the call, executives from both carriers pointed out the two carriers had few overlapping routes. In addition, Minicucci said the deal would also create a “clear leader” in the $8 billion Hawaiian market. Further, the combined airline would participate in the oneworld Alliance, bringing more customer benefits.
“We combine two companies with shared values that have competed and survived longer than most through many industry cycles, enhancing our differentiated business model and creating a stronger competitor to network carriers,” Minicucci told investors.
The acquisition is forecast to close between 12 and 18 months from now, pending approval by the Hawaiian Holdings shareholders. However it still needs an OK from reluctant regulators, who are fresh off a legal win that killed the JetBlue and American Airlines Northeast Alliance, and who are now seeking to block the proposed $3.8 billion JetBlue acquisition of Sprit Airlines.