Alaska and Hawaiian Airlines said they will aim to "maintain" each of their brand identities but operate under a single platform, combining into a 365-airplane fleet covering 138 destinations.
Unified Operations
Hawaiian Airlines, a rival of Alaska Airlines, is set to be acquired in a $1.9 billion deal to expand its presence along the West Coast. Based on a news release, Hawaiian Airlines is valued at $18 per share, including the absorption of $900 million in debt. At the $4.86 rate, shares of Hawaiian Airlines closed on Friday, giving the company a market cap of about $250 million.
The transaction is expected to finalize in the next 18 months, creating a combined company based in Seattle, led by Alaska Airlines CEO Ben Minicucci.
Customers can travel to more destinations due to the combined company's increased selection of essential air service options and access throughout the Pacific region, the continental United States, and the world. More substantial growth and competitiveness in the United States, long-term job opportunities for workers, ongoing community investment, and environmental stewardship are all anticipated benefits of the transaction.
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Strategic Acquisition
Hawaiian Airlines has faced difficulties, including challenges from Maui wildfires, increased competition from Southwest, and a slow recovery in travel to and from Asia post-pandemic. Unlike Alaska and other carriers that regained financial stability, Hawaiian posted net losses in most quarters since 2020. Alaska Airlines sees the acquisition as a unique opportunity, providing a strategic advantage in the premium-travel Hawaii market.
However, airline mergers have encountered resistance from the Biden administration's Justice Department. The DOJ dissolved a regional partnership between JetBlue Airways and American Airlines earlier. The ongoing legal battle with JetBlue's proposed acquisition of Spirit Airlines adds complexity. Despite this, Hawaiian and Alaska anticipate closing the deal in 12 to 18 months, pending regulatory and shareholder approval.
Advisors
Alaska Airlines is being advised financially by BofA Securities and PJT Partners and legally by O'Melveny & Myers LLP. Hawaiian Airlines receives legal and financial advice from Wilson Sonsini Goodrich & Rosati, Professional Corporation, and Barclays.
Brand Synergy
The airlines plan to maintain their brand identities but operate under a unified platform, boasting a 365-airplane fleet covering 138 destinations. Peter Ingram, CEO of Hawaiian Airlines, said this partnership aims to enhance guest experience and technology.
The merger will allow Alaska Airlines to triple nonstop or one-stop flights from Hawaii to destinations across North America, yielding a significant new platform support for above-average organic growth and a strategic focus on increasing options for West Coast travelers. The deal is anticipated to boost earnings within two years, with expected synergies of at least $235 million, to give Hawaiian Airlines shareholders a compelling premium while creating attractive value for Alaska Airlines' shareholders.
Alaska CEO Ben Minicucci is committed to investing in Hawaiian communities and sustaining robust Neighbor Island service. Minicucci also expressed confidence in the deal getting approved, citing 12 overlapping markets, a combined 1,400 daily flights, and a more extensive network that he said would allow the airline to compete with the four largest carriers.
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