Alaska Airlines’ $1.9 Billion Acquisition of Hawaiian Airlines
Alaska Airlines intends to acquire Hawaiian Airlines for $1.9 billion, which includes assuming $900 million of Hawaiian’s debt [link]. The companies expect the acquisition will make more money within two years. The combined airline would be part of the oneworld Alliance, which includes big names like American Airlines, British Airways, and Cathay Pacific. The merged airline will retain both brand names while operating on a single system. They plan to offer flights to 138 destinations around the world, including more options for Hawaii residents to visit North America. The approval process is expected to take 12 to 18 months, during which normal operations will continue [link].
As of December 1, 2023, the stock price for Hawaiian Holdings Inc (HA) was $4.86, and the market capitalization was $251.456 million, with 51.63 million shares outstanding (per yahoo finance). Alaska will pay $18 in cash for each share of Hawaiian Airlines [link].
Important Updates from Alaska Airlines’ CEO, Ben Minicucci
Alaska Airlines’ CEO, Ben Minicucci, personally shared some important updates in an email to Alaska Mileage Plan guests.
- Keeping the Hawaiian Airlines Brand: The well-known Hawaiian Airlines brand will continue to be visible on planes and in airports. It will coexist with the Alaska Airlines brand, sharing the same operating platform and loyalty program.
- More Places to Visit: Guests can expect more options and improved connectivity. The combined airline will fly to 138 destinations, including 29 international destinations such as Tokyo, Seoul, Sydney, and Auckland. Through the oneworld Alliance, you’ll also have access to over 1,200 global destinations. There will be 365 planes in total.
- Commitment to Hawai’i: Alaska Airlines is committed to improving services for residents of Hawai’i. They intend to keep and grow jobs in the Hawaiian Islands, invest in the careers of their employees, support community development, and prioritize environmental sustainability.
Ben Minicucci, CEO, Alaska Airlines
Our two airlines are powered by incredible employees, with 90+ year legacies and values grounded in caring for the special places and people that we serve. This is an exciting next step in our journey to elevate the travel experience and expand options for guests.
localcareglobalreach.com
Peter Ingram, CEO, Hawaiian Airlines
Since 1929, Hawaiian Airlines has been an integral part of life in Hawai‘i, and together with Alaska Airlines we will be able to deliver more for our guests, employees and the communities that we serve. Together, we can bring our authentic brands of hospitality to more of the world while continuing to serve our valued local communities.
localcareglobalreach.com
Government Scrutiny and Market Impact
But, the government, especially the Justice Department, is going to look closely at the deal because they worry it might reduce competition. They’ve been cautious about big partnerships in the airline industry, as seen in the case of American Airlines and JetBlue, and the ongoing situation with JetBlue attempting to buy Spirit Airlines.
In the broader picture of the airline industry in the U.S., four big carriers dominate the market: Delta Air Lines, American Airlines, Southwest Airlines, and United Airlines. Alaska, currently the fifth-largest, and JetBlue are trying to grow through acquisitions [link]. If approved, JetBlue’s market share could rise to over 10%, and the combined Alaska-Hawaiian airline would control just over 8% of the market. Despite concerns, there’s not much overlap in the routes Alaska and Hawaiian Airlines provide – about 3%. The contested routes, connecting airports in Hawaii with major West Coast cities, only make up about 6.7% of all seats flown by the airlines over the past year, according to Cirium, an aviation data provider. The success of the deal depends on getting regulatory approval and addressing concerns raised by worker unions [link].
In a Nutshell
This is my initial impression after reading the news: People who fly with Alaska Airlines frequently may be concerned about the acquisition. Positive aspects include the assurance that current Mileage Plan benefits will be maintained and the possibility of enhancements. The uncertainty during the 12 to 18-month approval process, on the other hand, may make loyal guests uneasy. The Alaska Airlines’ $1.9 Billion acquisition is a big business move that could benefit travelers and the airlines. But, it faces scrutiny from regulators, which might affect competition. Worker unions are also involved, making things more complex. Loyal guests should keep an eye on updates during the approval process.
