Alaska Airlines to acquire Hawaiian Airlines in a $1.9 billion deal

Alaska Airlines has announced its acquisition of rival Hawaiian Airlines in a $1.9 billion deal as the two carriers aim to expand their presence along the West Coast. The deal will see Alaska Airlines pay $18 per share for Hawaiian Airlines, and will also include $900 million of Hawaiian’s debt.

Market Landscape

Hawaiian Airlines had faced multiple challenges, including the Maui wildfires, and has seen its stock price drop by nearly 53% this year. The struggling airline has struggled to cope with these challenges, hence the merger is deemed a strategic move.

Alaska Airlines CFO, Shane Tackett, commented on the deal, saying, “What we saw here was a unique opportunity in time at the valuation that we saw Hawaiian at,” noting that the acquisition would position the combined companies as a market leader in the premium-travel Hawaii market. He remarked, “We didn’t view this as an opportunity that we shouldn’t let pass because it may not come again in our careers.”

Regulatory Approval and Future Outlook

The airlines anticipate that the transaction will close in 12 to 18 months, subject to regulatory approval. The Justice Department, under President Joe Biden, has taken a tough stance against anticompetitive combinations, and this move to acquire Hawaiian Airlines will likely be closely scrutinized.

The combined company will be based in Seattle, Alaska Airlines’ headquarters, and will be led by its CEO, Ben Minicucci. The two airlines will maintain their individual brands but will operate under a single platform, combining into a 365-airplane fleet that covers 138 destinations.

Significance of the Acquisition

This acquisition comes seven years after Alaska Airlines’ acquisition of Virgin America, and purchasing Hawaiian Airlines would bring a mix of Boeing and Airbus jets under its roof, potentially accelerating investments in guest experience and technology.

Alaska Airlines CEO, Ben Minicucci, emphasized the commitment to investing in the communities of Hawai’i and maintaining robust Neighbor Island service that Hawaiian Airlines travelers have come to expect. The deal is expected to triple nonstop or one-stop flights from the Hawaiian islands to destinations throughout North America.

The combined entity is projected to bolster earnings within the next two years, with at least $235 million of expected “run-rate synergies.” Lastly, the deal is a strategic move for both airlines to reinforce their presence in the competitive airline industry.