Alaska Airlines agrees to buy Hawaiian Airlines in $1.9 billion deal

Alaska
Air
Group
has
agreed
to
buy
rival


Hawaiian
Airlines
in
a
$1.9
billion
deal,
setting
up
another
potential
regulatory
battle
in
the
second
proposed
airline
merger
in
less
than
two
years.

Alaska
would
pay
$18
a
share
for
Hawaiian
and
would
take
on
$900
million
of
its
debt,
the
companies

said
Sunday.
Shares
of
Hawaiian
Airlines
closed
on
Friday
at
$4.86,
giving
the
company
a
market
cap
of
about
$250
million.
They’re
down
nearly
53%
this
year.

The
airline
has
struggled
with
challenges
including
the

Maui
wildfires,
increased
competition
from
Southwest,
which
has

ramped
up
service
in
Hawaii
in
recent
years,
and
a
lagging
recovery
of
travel
to
and
from
Asia
after
the
pandemic.
Hawaiian
has
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.

“What
we
saw
here
was
a
unique
opportunity
in
time
at
the
valuation
that
we
saw
Hawaiian
at,”
said
Shane
Tackett,
Alaska
Airlines’
CFO,
in
an
interview.
He
said
the
deal
would
also
enable
the
combined
companies
to
become
a
“market
leader”
in
the
premium-travel
Hawaii
market.

Carriers
have
faced
strong
opposition
from
President
Joe
Biden’s
Justice
Department
in
their
efforts
to
combine
to
better
compete
with
larger
rivals.
Earlier
this
year,
the
DOJ
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
Airways‘
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.
Hawaiian
and
Alaska
said
they
expect
the
transaction
to
close
in
12
to
18
months,
subject
to
approval
by
regulators
and
Hawaiian’s
shareholders.

On
a
call
with
analysts
on
Sunday
evening,
Alaska
CEO
Ben
Minicucci
expressed
confidence
in
the
deal
getting
approved,
citing
12
overlapping
markets,
a
combined
1,400
daily
flights
and
a
larger
network
that
he
said
would
allow
the
airline
to
compete
with
the
four
largest
carriers.

“We
are
hopeful
that
it
will
be
seen
in
a
positive
light,”
he
said.

The
Association
of
Flight
Attendants-CWA,
which
represents
cabin
crews
at
both
airlines
said
it
would
evaluate
the
deal.

“Our
first
priority
is
to
determine
whether
this
merger
will
improve
conditions
for
Flight
Attendants
just
like
the
benefits
the
companies
have
described
for
shareholders
and
consumers,”
the
AFA
said
in
a
statement.
“Our
support
of
the
merger
will
depend
on
this.”

The
combined
company
will
be
based
in
Seattle,
where
Alaska
Airlines
is
headquartered,
and
be
led
by
Minicucci.

“Given
the
transaction
dollars
we
paid
we
feel
this
is
strategically
a
step-change
for
us
to
accelerate
not
only
our
financial
performance
but
the
growth
of
our
network,”
he
said
said
on
the
call.

The
two
airlines
said
they
will
keep
each
carrier’s
brand
but
operate
under
a
single
platform,
combining
into
a
365-airplane
fleet
covering
138
destinations.

Prior
to
pursuing
Hawaiian,
Alaska
Airlines
acquired
Virgin
America
for
$2.6
billion
in
2016.

The
Hawaiian
deal
is
a
major
shift
for
Alaska.
It
operates


Boeing
737s
and
it
spent
years
whittling
down
Virgin’s
fleet
of
Airbus
planes
to
streamline
its
fleet.
Purchasing
Hawaiian
would
bring
a
complex
mix
of
Boeing
and
Airbus
jets,
both
narrow-body
and
wide-body
planes,
under
Alaska’s
roof.

“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
the
call
Sunday.

The
combination
will
allow
Alaska
Airlines
to
triple
nonstop
or
one-stop
flights
from
the
Hawaiian
islands
to
destinations
throughout
North
America.
It
will
also
bring
Hawaiian’s
long-haul
flying
to
and
from
Asia
under
Alaska’s
umbrella.
Hawaiian
last
year
struck
a
deal
to
fly

converted-cargo
planes
for


Amazon.

Alaska
Airlines
said
the
deal
should
bolster
earnings
within
the
next
two
years
with
at
least
$235
million
of
“run-rate
synergies.”

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