Hawaiian Airlines is being bought up by Alaska Air for $1.9 billion, it was announced on Sunday, if a proposed deal is approved by shareholders.
Under the proposal, both carriers will keep their own brand identity even though the pair will essentially become a combined force with greater air route coverage thanks to the lack of overlap in their itineraries.
Excited to combine with @HawaiianAir to bring local care and global reach to travelers throughout Hawai‘i, the West Coast and beyond https://t.co/I4D0FgXDlW.— Alaska Airlines (@AlaskaAir) December 3, 2023
Press release: https://t.co/TMeEfwSbpQ pic.twitter.com/NkOeXGh958
Bringing the two airlines’ networks together yields one entity with around 138 destinations across the continental United States and the Pacific, including 29 international routes to the Americas, Asia, Australia and the South Pacific.
The budding powerhouse will share Seattle headquarters and Alaska’s CEO Ben Minicucci will sit at the helm.
Why keep the brands separate?
The US aviation market is grappling with domination from the so-called “Big Four” (American Airlines, Delta, Southwest and United). To keep ticket prices down, the Biden administration has been attempting to defend smaller, disruptive carriers and fight against giant-forming mergers with anti-trust lawsuits.
Viewed through this lense the decision to maintain Alaska and Hawaiian’s “outsider” branding could be seen as a move to distance themselves from any public (or government) perception that yet another aviation behemoth is forming.
$900 million in debt
While the deal has already beeen approved by Board members, Hawaiian’s shareholders are yet to okay it. It is hard to see them turning down $18 dollars a share, when Hawaiian stock has plummeted, losing just over half its value in the year so far.
The terms of the Alaska acquisitition include taking on $900 million in Hawaiian debt. Recommending the deal to shareholders, Hawaiian’s CEO Peter Ingram, highlighted the airline’s emotional and economic importance to the island nation. “Aloha, everyone,” he said, adding that the proposed deal means “the Hawaiian brand will remain an important part of our home state.”
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.Ben Minicucci, CEO of Alaska Airlines
Meanwhile, Alaska’s Minicucci emphasised Hawaiian’s longevity and complementary route menu to investors in a conference call with investors.
Profits within two years
The deal is predicted to close in a year to a year and a half, and to see profits within two years. Somehow the planes in any new network will have to fly under the radar of a government and the Department of Transport with a sharp eye on rising airfares, as more and more airlines attempt to consolidate through mergers.