Alaska Airlines to Acquire Hawaiian Airlines in $1.9 Billion Deal
Alaska Airlines has agreed to acquire rival Hawaiian Airlines in a $1.9 billion deal, with the aim of expanding their operations across the West Coast. The acquisition includes $900 million of Hawaiian’s debt, with Alaska paying $18 a share for the company. Shane Tackett, Alaska Airlines’ CFO, explained that they saw a unique opportunity in the valuation of Hawaiian Airlines, and the deal would enable the combined companies to dominate the premium-travel Hawaii market.
Regulatory Approval Still Pending
The airlines expect the transaction to close within 12 to 18 months, pending approval from regulators. President Joe Biden’s Justice Department has a history of taking a hard stance against anticompetitive combinations and had previously sued to block JetBlue Airways’ proposed acquisition of discount carrier Spirit Airlines. The combined company will be based in Seattle, where Alaska Airlines is headquartered, and will be led by its CEO, Ben Minicucci.
Deal Comes Seven Years After Acquisition of Virgin America
The deal comes seven years after Alaska Airlines acquired Virgin America in a $4 billion deal. The plan is to maintain both Hawaiian and Alaska Airlines’ brands but operate under a single platform, utilizing a combined fleet of 365 airplanes that cover 138 destinations. The acquisition of Hawaiian Airlines will bring a complex mix of Boeing and Airbus jets, both narrow-body and wide-body planes, under Alaska’s roof.
Boosting the Airline Market and Earnings
The acquisition is expected to bolster earnings within the next two years, with at least $235 million of expected “run-rate synergies.” This will allow Alaska Airlines to triple nonstop or one-stop flights from the Hawaiian islands to destinations throughout North America. Both airlines’ CEOs expressed their commitment to investing in the communities of Hawai’i and to maintaining robust Neighbor Island service that Hawaiian Airlines travelers have come to expect.
These adjustments in the airlines’ operations and market strategies are aimed to accelerate investments in their guest experiences and technology, while maintaining the Hawaiian Airlines brand, and securing Alaska Airlines as a “market leader.” This move is expected to create a significant shift in the airline industry along the West Coast, particularly in the premium-travel Hawaii market.
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