Alaska Airlines has reached a nearly $2 billion deal to buy Hawaiian Airlines, executives with the two carriers announced Sunday.
Under the terms of the transaction, Alaska Air will pay $18 a share in cash, the two companies said, for a transaction value of $1.9 billion.
“This brings together two great companies steeped in history — both 90 years in service,” Alaska Airlines chief executive Ben Minicucci said. “We share the same values — connecting communities and connecting people.”
Peter Ingram, chief executive of Hawaiian Airlines, said his airline has expanded over the years, adding a hub in Maui and more international flights, but hasn’t been able to offer its customers access to more destinations on the mainland. The deal with Alaska will make that possible.
“There is something really unique about this combination when you think about the origins of these two companies,” Ingram said. “There are no two states in the country that are more reliant on transportation than Alaska and Hawaii.”
Advertisement
News of the agreement was first reported by the Wall Street Journal.
The transaction would be the second airline merger in just over a year and is expected to face close scrutiny by regulators. It comes at a time when the Biden administration has been aggressively challenging such deals in a wide swath of industries that are dominated by a small number of players. A trial challenging a merger between JetBlue and Spirit Airlines is currently underway in Boston with closing arguments expected on Tuesday.
Aviation analyst Henry Harteveldt said because of those dynamics, the timing of the announcement is likely to raise eyebrows.
“Given the Biden administration’s stated objections to further consolidation in highly concentrated industries, is this really the right time for two airlines to merge?” he said. “In this case, however, I think the Biden administration would have a hard time objecting to the combination of Alaska and Hawaii. Both are very small airlines relative to the four largest carriers. There’s very little route overlap. And we’re not talking about the loss of an ultra-low-fare airline in the process.”
Advertisement
Even so, others said the loss of any carrier will be a loss for consumers.
“Competition between airlines is the single biggest cause of cheap flights. A merger between these two airlines — whose route maps have dozens of flights that overlap — would result not in more cheap flights for consumers, but fewer,” said Scott Keyes, founder and chief flight expert at travel website Going.com.
Share this articleShareIt remains to be seen how regulators will view the deal. The Justice Department did not comment on the Alaska merger.
In addition to challenging a proposed merger between JetBlue and Spirit Airlines, the Justice Department successfully filed suit to block an alliance between JetBlue and American Airlines that was approved in the waning days of the Trump administration.
In the case underway in the same federal court in Boston, Justice Department lawyers are arguing that a merger between JetBlue and Spirit should not be approved because it will lead to the loss of an ultra-low-cost carrier with particular appeal to cost-conscious consumers, leading to fewer seats and higher prices that could leave some consumers without flight options. JetBlue, however, has argued that allowing it to acquire Spirit would help consumers, because as a larger airline it would be a stronger challenger to the top four carriers, forcing them to lower their prices.
Advertisement
Alaska is currently the nation’s fifth largest carrier but would drop to sixth if the JetBlue-Spirit merger is approved. However, combining with Hawaiian would enable it to retain that fifth spot. The last major U.S. merger in 2017 also involved Alaska, which outbid JetBlue for Virgin America.
If the deal is approved, the carriers will have one operating certificate, but will continue to operate as separate brands.
“People in Hawaii are very passionate about the brands that have been around here for a long time,” said Ingram. “One of the things that is really going to resonate today is the show of respect that there is for the Hawaiian brand. The team has decided that it is important to maintain that brand going forward. I think that’s going to be important in this community.”
Unions representing pilots, flight attendants, passenger service, ramp and other services at Alaska and Hawaiian said they would closely scrutinize the impact the merger would have on workers before deciding whether they would support it.
Advertisement
In a statement, the nation’s largest flight attendants union, the Association of Flight Attendants-CWA, which represents 6,800 flight attendants at Alaska and 2,200 at Hawaiian, said it wanted to ensure the merger would improve conditions for flight attendants.
The International Association of Machinists and Aerospace Workers (IAM), echoed similar sentiments.
“Our membership at Alaska and Hawaiian Airlines are rightfully proud of the work they’ve done to make these carriers successful,” said Mike Klemm, the IAM District 141 president and directing general chair. “We will use every resource necessary to ensure that their livelihoods are protected during this acquisition.”
Minicucci said there will be no loss of union jobs because the carriers are not making any changes to their networks. He said the airlines overlap on only 12 routes. Alaska also will open a “significant” regional headquarters in Hawaii, similar to the ones it operates in Alaska and California, he said.
Advertisement
Minicucci said he began talking with the Alaska board early this year about the possibility of a deal with Hawaiian and approached Ingram several months ago. Ingram said Hawaiian’s board began its process of evaluating the deal before voting unanimously to approve it on Saturday. He said based on Alaska’s previous experience when it acquired Virgin American, it could take 12 to 18 months for the transaction to close.
ncG1vNJzZmivp6x7uK3SoaCnn6Sku7G70q1lnKedZMGzrc2sp6iqpJbBqrvNaGlpamNkfnN7j2xmmqSRqLiiecCiqaWhnprAbrTAsJiioZGjeqK10aWgp52jYrqmvsaeqWg%3D