Alaska Airlines has agreed to buy Hawaiian Airlines in a $1.9 billion deal, putting it on track for a potential clash with the Biden administration that has shown wariness about consolidation in the airline industry.
The combined company would keep both airlines’ brands, rooted in the nation’s 49th and 50th states. The two airlines announced the deal on Sunday, Dec. 3.
The combined business would be based in Seattle, with Alaska Airlines CEO Ben Minicucci at its head, though Hawaiian Airlines would maintain its key operations hub in Honolulu.
The deal means Alaska Air, the fifth-largest U.S. airline, would expand to a fleet with 365 narrow and wide-body planes, the airline said. Alaska currently operates a mostly all-Boeing fleet, with some of the 76-passenger Embraer planes, totaling 303 aircraft, while Hawaiian operates a mix of Boeing and Airbus in its 62-plane fleet.
The deal will bring together two airlines with 55 million passengers annually, according to Alaska Airlines, which carries almost four times the passengers and operates almost four times the flights as Hawaiian Airlines.
In addition to a heavy flight schedule from the West Coast to the 50th state, Hawaiian also serves the islands from the U.S. East Coast, Texas and Las Vegas, and flies between Hawaii and Japan, South Korea, Australia and several South Pacific islands.
The expanded company will cover 138 destinations throughout the airlines’ networks.
Hawaiian has a long history within the islands, stretching back to its incorporation in 1929 under the name Inter-Island Airways.
Alaska will pay $18 in cash for each share of Hawaiian, whose stock closed Friday, Dec. 1, at $4.86 after losing just over half its value in the year so far.
The companies forecast the acquisition will add to profits within two years of the deal closing. The combined airline would participate in the oneworld Alliance, which includes American Airlines, British Airways and Cathay Pacific.
The deal has been approved by the boards of both companies, but it still needs an OK from the shareholders of Hawaiian Holdings. It will also need the blessing of U.S. regulators, which have resisted more airline consolidation out of fear it could lead to higher fares.
Both Hawaiian and Alaska are leading airlines flying between Hawaii and the U.S. mainland, which could raise concerns about reduced competition.
The Biden administration is already trying to block JetBlue’s proposed $3.8 billion acquisition of Sprit Airlines, which would absorb the nation’s biggest budget carrier. The Justice Department also won a lawsuit that killed a partnership between JetBlue and American Airlines.
The Alaska and Hawaii companies expect the deal to close in 12 to 18 months, and each will continue its usual operations.
The agreement comes six years after Alaska Airlines acquired Virgin America for $2.6 billion.
The Association of Flight Attendants-CWA, AFL-CIO said the union is currently negotiating with Alaska Airlines and will be watching the merger to make sure it improves conditions for flight attendants.
“Our support of the merger will depend on this,” the organization said in a statement. “As a practical matter, our union constitution and bylaws provide a detailed process for this review.”
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