Alaska Airlines said Sunday it agreed to buy Hawaiian Airlines in a $1.9bn deal, including debt, putting it on track for a potential clash with a Biden administration that has shown wariness about higher fares in the industry.
The combined company would keep both airlines’ brands, rooted in the nation’s 49th and 50th states. Alaska will pay $18 in cash for each share of Hawaiian, whose stock closed Friday at $4.86 after losing just over half its value in the year so far.
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The deal also includes $900m in Hawaiian Airlines debt, which the airlines said brings the acquisition’s total value to $1.9bn. The combined airline would be based in Seattle, with Alaska Airlines CEO Ben Minicucci at its head. 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.
Alaska and Hawaiian are both smaller than the nation’s dominant carriers, but they said a combination would meld two complementary networks to offer more connectivity to 138 destinations for passengers traveling through the continental US and across the Pacific, including non-stop service to 29 international destinations in the Americas, Asia, Australia and the South Pacific.
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Hawaiian has a deep and long history within the islands, stretching back to its incorporation in 1929 under the name Inter-Island Airways.
The companies said they would keep Honolulu as a key hub and that they’re “committed to maintaining and growing union-represented workforce” in Hawaii. They also said the combination would triple the destinations that can be reached within one stop in North America for travelers from Hawaii.
“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,” Minicucci said in a statement.
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 US regulators, which have resisted more airline consolidation out of fear it could lead to higher fares.
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Both Hawaiian and Alaska are leading airlines flying between Hawaii and the US mainland, which could raise concerns about lessened competition.
The Biden administration is already trying to block JetBlue’s proposed $3.8bn acquisition of Sprit Airlines, which would subsume the nation’s biggest budget carrier. The justice department also won a lawsuit that killed a partnership between JetBlue and American Airlines.
The average domestic airline fare out of Seattle during the spring was $409.93. That was up from $293.08 two years earlier, according to data from the US Department of Transportation. The average domestic airline fare out of Honolulu during the spring was $367.94, up from $329.93 two years earlier.
The Alaska and Hawaii companies expect the deal to close in 12 to 18 months.
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