Sharad RanabhatAlaska Airlines has announced that it plans to acquire Hawaiian Airlines in a deal valued at $1.9 billion, paving the way for the formation of the fifth-largest U.S. carrier.
This move would grant Alaska Airlines control of over 50% of the Hawaii flights market. Additionally, Hawaiian Airlines is expected to join the Oneworld alliance, contingent upon approval from U.S. regulators.
While both brands will be maintained separately, the plan involves merging the operating platform and loyalty program, with the consolidated entity to be headquartered in Seattle under the leadership of Alaska Airlines CEO Ben Minicucci. The consolidated entity will establish Honolulu as a crucial hub for Alaska Airlines.
“This combination is an exciting next step in our collective journey to provide a better travel experience for our guests and expand options for West Coast and Hawaii travelers.” said Ben Minicucci, Alaska Airlines CEO.
The agreement encompasses $900 million in Hawaiian Airlines' net debt, with Alaska Air agreeing to pay $18 per share in cash.
Residents of Hawaii stand to benefit significantly, gaining access to three times the number of North American destinations through the merged airline, which is projected to serve 138 destinations, including 29 international destinations such as Tokyo, Seoul, Sydney and Auckland.
“This is where people want to come spend time and vacation and have weddings and anniversaries. This is something that we believe that will remain strong for years to come," said Ben Minicucci, Alaska Airlines CEO.
Following the acquisition of Hawaiian Airlines, Alaska Airlines will hold an 8 percent share of the domestic airline industry. However, there's a possibility of dropping to the sixth position, trailing behind JetBlue Airways, if JetBlue's bid to acquire Spirit Airlines receives approval.
Recently, U.S. regulators have been suspicious of mergers between small airlines despite 80% of the U.S. aviation sector being controlled by four players.
Despite the potential reshuffling, Minicucci expressed confidence in regulatory approval by the end of 2024, citing minimal overlap between the two airlines' routes - just 12 out of the 1,400 flights they collectively operate.
Alaska Air reportedly approached Hawaiian to discuss a potential tie-up over the summer, people familiar with the matter reported.
Post the acquisition of Virgin America in 2016, Alaska Air has exclusively operated Boeing 737 planes since late September this year. The combined airlines will initially operate a mixed fleet, with Minicucci not ruling out future streamlining efforts.