SEATTLE (AP) — In a $1.9 billion agreement, including debt, Alaska Airlines announced on Sunday its plans to acquire Hawaiian Airlines, setting the stage for a potential confrontation with the Biden administration’s concerns about escalating fares in the industry.
The merger will preserve both airlines’ brands, anchoring them in the states of Hawaii and Alaska. Alaska will pay $18 in cash for each share of Hawaiian, with the latter’s stock closing at $4.86 after a 50% drop in value this year.
With $900 million in debt from Hawaiian included, the acquisition’s total value sits at $1.9 billion. The combined airline would be headquartered in Seattle, with Ben Minicucci, CEO of Alaska Airlines, leading the company.
The combined airline will join the oneworld Alliance, alongside other major airlines like American Airlines, British Airways, and Cathay Pacific. It is projected that the acquisition will contribute to profits within two years of completion.
By merging their networks, Alaska and Hawaiian aim to enhance connectivity to 138 destinations across the continental United States and the Pacific, expanding service to 29 international locations in the Americas, Asia, Australia, and the South Pacific.
Hawaiian Airlines has an extensive history in the islands, starting back in 1929 as Inter-Island Airways. The companies have committed to maintaining Honolulu as a key hub and ensuring the growth of union-represented employees in Hawaii.
The deal has been approved by both companies’ boards, pending final approval from Hawaiian Holdings shareholders and U.S. regulators. The potential decrease in competition in the Hawaii-U.S. mainland route may raise concerns for regulators, similar to the ongoing resistance against other airline mergers.
Anticipated to close in 12 to 18 months, the Alaska-Hawaiian merger could reshape the airline industry, while the Biden administration maintains its vigilance over industry consolidation and potential fare increases.