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Alaska Airlines Acquires Hawaiian Airlines for $1.9B

Dec 6, 2023 | News, Transportation

Alaska Airlines with a Hawaiian Lei on the tail of the aircraft.

Armin Rodler | Flickr

Two companies named for US states are becoming one. The parent company of Alaska Airlines, the country’s fifth-largest carrier by passenger load, is absorbing the tenth largest, Hawaiian Airlines.

Aloha, Alaska

The boards of both parent companies, Alaska Air Group and Hawaiian Holdings, approved the transaction valued at $1.9 billion. The acquisition is expected to take twelve to eighteen months to complete, pending regulatory approval and a “yes” vote by Hawaiian Holdings shareholders, expected in the first quarter of 2024.

The cash transaction worth $18 per share includes $900 million of Hawaiian Airlines net debt. A statement from the companies calls the total equity value “a compelling premium for Hawaiian Airlines shareholders.”

Both airlines would continue operating their existing brands, and the combined organization would be based in Seattle under Alaska Airlines CEO Ben Minicucci.

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

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Alaska Airlines has about 23,000 employees worldwide, about 2,000 of them in its namesake state. That makes the company the 11th-largest private sector employer in Alaska. Hawaiian Airlines, in business since 1929, is among the largest employers in its home state.

Both airlines’ networks service 138 destinations, including non-stop service to twenty-nine top international destinations in the Americas, Asia, Australia, and the South Pacific. Honolulu becomes a new hub city for Alaska Airlines, which entered the Hawaii market about sixteen years ago.

“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,” says Peter Ingram, Hawaiian Airlines president and CEO. “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.”

The companies say a dedicated leadership team will focus on integration planning.

Synergy Potential

By acquiring Hawaiian Airlines, Alaska Airlines adds routes not just to the islands but to destinations in Japan, Korea, Australia, and New Zealand.

Alaska Airlines | Hawaiian Airlines

Flight attendants from both companies had already scheduled a picket on December 19 as their union, the Association of Flight Attendants-CWA, AFL-CIO, negotiates with Alaska Airlines. The union, representing more than 6,800 flight attendants at Alaska Airlines and 2,200 at Hawaiian Airlines, is reviewing the merger.

“Our first priority is to determine whether this merger will improve conditions for flight attendants just like the benefits the companies have described for shareholders and consumers. Our support of the merger will depend on this,” says the flight attendants union. “Our union will continue to press forward in negotiations at Alaska Airlines.”

Alaska Airlines says the combination fits with its corporate strategy to expand options for West Coast travelers while enhancing organic growth. Approximately $235 million of expected run-rate synergies reflect a conservative estimate of the transaction’s synergy potential.

BofA Securities and PJT Partners are serving as financial advisors and O’Melveny & Myers is serving as legal advisor to Alaska Airlines. Barclays is serving as financial advisor and Wilson Sonsini Goodrich & Rosati is serving as legal advisor to Hawaiian Airlines.

With a combined 54.7 million annual passengers, the merged airline would remain the fifth largest in the United States behind American, Delta, Southwest, and United Airlines.

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