Monday, March 04, 2024 |
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A Hawaiian Airlines plane taxis for position in 2005 at Kahalui, Maui. (AP Photo/Lucy Pemoni, File)
SEATTLE (AP) — Alaska Airlines agreed to buy Hawaiian Airlines in a $1.9 billion deal announced Sunday, potentially putting it on track for a clash with a Biden administration wary of higher airfares.
The combined company would maintain both airlines’ brands, an unusual move in an industry where waves of acquisitions have led to four big brands dominating the U.S. market. On Sunday, the companies said Alaska will pay $18 in cash for each share of Hawaiian, whose stock closed Friday at $4.86 after losing just over half its value in the year so far.
Officials from both companies called the deal a chance to combine two carriers with few overlapping routes, which they said would create a stronger company to compete with the nation’s Big Four: American Airlines, Delta Air Lines, Southwest Airlines and United Airlines. It would also create a “clear leader” in the lucrative, $8 billion Hawaiian market, Alaska CEO Ben Minicucci said in a conference call with investors.
“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,” he said.
The deal includes $900 million in Hawaiian debt, bringing the acquisition’s total value to $1.9 billion. The combined airline would be based in Seattle, with Alaska’s Minicucci at its head. The companies forecast the acquisition will add to profits within two years of the deal closing, which is forecast to happen between 12 and 18 months from now.
The combined airline would participate in the oneworld Alliance, which includes American Airlines, British Airways and Cathay Pacific.
Alaska and Hawaiian are both smaller than the nation’s dominant carriers. They said the deal would meld two complementary networks, increasing connectivity to 138 destinations for passengers traveling through the continental United States and across the Pacific, including nonstop service to 29 international destinations in the Americas, Asia, Australia and the South Pacific.
Hawaiian has a deep and long history within the islands, stretching back to its incorporation in 1929 under the name Inter-Island Airways.
The companies said they would keep Honolulu as a key hub and that they’re “committed to maintaining and growing union-represented workforce” in Hawaii.
The Alaska Airlines acquisition of Hawaiian Airlines will not result in the loss of any union jobs and the “majority” of the 1,400 non-union employees will be retained to run the expanded service, the companies’ top executives say.
The new company will maintain and burnish the brands of Alaska and Hawaiian Airlines, Hawaiian Airlines’s president and CEO Peter Ingram, and Alaska Airlines CEO Ben Minicucci told the Honolulu Star-Advertiser in an interview Sunday morning, shortly after the $1.9 billion deal was announced.
Until the shareholder review and regulatory processes play out, Hawaiian and Alaska “remain competitors,” Ingram said.
“Nothing changes in terms of how we operate our business on the Hawaiian side. We don’t have any plans for reductions in activities during that period of time,” he said.
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