Alaska Airlines and Hawaiian Airlines to merge in US$1.9 Billion deal

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Photo: Hawaiian Airlines

Alaska Air Group and Hawaiian have announced that they have reached a final agreement. As a result, Alaska Airlines will acquire Hawaiian Airlines for $18.00 per share in cash. The total transaction value is around $1.9 billion, which includes $0.9 billion of net debt from Hawaiian Airlines.

With the merger, customers will have access to more destinations and a more comprehensive range of essential air service options across the Pacific, the continental US, and the world. Environmental responsibility, long-term employment prospects for employees, sustained investment in local communities, and a better foundation for development and competitiveness in the United States are all anticipated outcomes of the transaction.

If given the go-ahead by regulators, the combination of the two companies is expected to increase the competitiveness of both brands in the highly competitive US airline market, particularly in areas that depend significantly on air travel, such as the 49th and 50th states in the US, Alaska, and Hawai’i.

In making the announcement, Alaska Air Group and Hawaiian Holdings empathised that both brands’ unique cultures would be preserved and built upon.

As members of the same airline alliance, oneworld, the two airlines could streamline their operations and provide customers with more worldwide connections if they merged.

Currently, 54.7 million passengers are served annually by the two airlines combined.

“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 Hawai’i travellers,” Minicucci said.

“We have a longstanding and deep respect for Hawaiian Airlines, their role as a top employer in Hawai’i, and how their brand and people carry the warm culture of aloha around the globe.

“Our two airlines are powered by incredible employees, with 90+ year legacies and values grounded in caring for the special places and people we serve.

“I am grateful to the more than 23,000 Alaska Airlines employees who are proud to have served Hawai’i for over 16 years, and we are fully committed to investing in the communities of Hawai’i and maintaining robust neighbour Island service that Hawaiian Airlines travellers have come to expect.

“We look forward to deepening this stewardship as our airlines come together while providing unmatched value to customers, employees, communities and owners.”

“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 we serve,” said Peter Ingram, Hawaiian Airlines President, and CEO.

“In Alaska Airlines, we are joining an airline that has long served Hawai‘i and has a complementary network and a shared culture of service. With the additional scale and resources that this transaction with Alaska Airlines brings, we will be able to accelerate investments in our guest experience and technology while maintaining the Hawaiian Airlines brand.

“We are also pleased to deliver significant, immediate, and compelling value to our shareholders through this all-cash transaction. Together, Hawaiian Airlines and Alaska Airlines can bring our authentic brands of hospitality to more of the world while continuing to serve our valued local communities.”

The combination of complementing domestic, international, and freight networks is positioned to increase competition and improve choice for West Coast and Hawaiian Islands customers through:
Preserving outstanding brands: The combined airline will maintain both the industry-leading Alaska Airlines and Hawaiian Airlines brands while integrating into a single operating platform, enabling customers to enjoy the exceptional service and hospitality of each while upholding the operational reliability, trust, and guest satisfaction for which both companies have been consistently recognised.
An improved product offering for a wide range of consumers: The merger preserves and expands high-quality, best-in-class product offerings with price points to make air travel more accessible to a wide range of consumers across a range of cabin classes, including more choice between Alaska Airlines’ high-value, low-fare options and Hawaiian Airlines’ international and long-haul product on par with network carriers.
Complementary networks expand travel options: Passengers travelling throughout the Continental United States, the West Coast of the United States, and across the Pacific will benefit from more choice and increased connectivity across both airlines’ networks, with service to 138 destinations, including nonstop service to 29 top international destinations in the Americas, Asia, Australia, and the South Pacific, and combined access to over 1,200 destinations through the oneworld Alliance.
Expanded service for Hawai’i residents: The combination will increase service and convenience by tripling the number of destinations in North America that can be reached nonstop or with one stop from the Islands while maintaining robust Neighbour Island service and increasing air cargo capacity.
Strategic Honolulu hub: With one-stop service through Hawai’i, Honolulu will become a key Alaska Airlines hub, offering greater international connectivity for West Coast passengers across the Asia-Pacific region.
Expanded loyalty programme benefits: The transaction will provide Hawaiian Airlines’ loyalty members with enhanced benefits through the combined airline’s industry-leading loyalty programme, such as the ability to earn and redeem miles on 29 global partners and receive elite benefits on the full complement of oneworld Alliance airlines, expanded global lounge access, and benefits of the combined program’s co-brand credit card.

Both airline boards have approved the transaction agreement. The transaction is subject to regulatory approvals, shareholder approval from Hawaiian Holdings, Inc. (expected in the first quarter of 2024), and other usual closing conditions.

It is expected to be completed within 12-18 months. Alaska Airlines CEO Ben Minicucci will run the merged organisation from its Seattle headquarters. To focus on integration planning, a dedicated leadership team will be formed.

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