The Madrid-based International Airlines Group (IAG), a holding corporation controlling five airlines (British Airways, Iberia, Aer Lingus, Vueling, and LEVEL),…
Alaska Airlines to Acquire Hawaiian
The combined company will maintain two separate brands but have an integrated network, forming the fifth-largest U.S. airline.
Alaska Airlines and Hawaiian Airlines have announced a $1.9 billion deal that will see Alaska acquire Hawaiian. The transaction will see the two airlines combine into a single company, strengthening Alaska’s position as the fifth-largest airline in the United States.
Details of the Proposed Transaction
The transaction would see Alaska Air Group acquire Hawaiian Holdings for $18.00 per share in cash – a generous premium for Hawaiian shareholders who saw the company’s stock close at $4.86 per share on Friday. Inclusive of Hawaiian’s net debt of $0.9 billion, the total value of the transaction will be approximately $1.9 billion.
In a press release announcing the acquisition, the companies stated that the deal is expected to create approximately $235 million of synergies without having a long-term impact on balance sheet metrics or leverage levels. The transaction is expected to close within 12-14 months. Although the deal has received the green light from both boards, it is conditional on approval from regulators and Hawaiian shareholders.
“We are also pleased to deliver significant, immediate and compelling value to our shareholders through this all-cash transaction,” Hawaiian Airlines President and CEO Peter Ingram, states in the press release. “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.”
Combining Complementary Networks
Serving the 49th and 50th states, the two airlines largely serve distinct markets. Alaska has a strong network throughout the U.S. West Coast, with additional routes to the eastern part of the country and to warmer southern destinations throughout Central America.
Meanwhile, Hawaiian focuses on intra-island flights and transpacific flights connecting the Hawaiian islands to the continental U.S. Unlike Alaska, the carrier also has a long-haul fleet, flying from Hawaii to the U.S. mainland, Asia and Oceania.
As shown in a combined route map that accompanied Sunday’s announcement, the two airlines have largely complementary networks. The main overlapping area of competition is routes connecting the U.S. West Coast to Hawaii. Once the transaction is completed, the combined company is expected to serve over 130 destinations.
The merged entity will maintain Alaska’s oneworld membership, giving Hawaiian customers access to the alliance’s global network. Alaska customers will benefit from greater connectivity between the U.S. West Coast and the Asia-Pacific region through Hawaiian’s Honolulu hub.
One Company, Two Brands
Although the two airlines are combining to form one company, both airline brands will be maintained. Alaska and Hawaiian each have distinct brands with loyal customer bases, and it is evident that the companies recognize the strength of their existing brands.
With a fleet of 365 aircraft, the combined company will have a mixed fleet of Airbus and Boeing jets. Having recently returned to an all-Boeing fleet with the retirement of the remaining Virgin America aircraft, the Alaska Air Group will soon see the reintroduction of Airbus aircraft into its portfolio.
Alaska’s fleet currently consists exclusively of Boeing 737s – although its regional partners operate Embraer 175s under the company’s brand – while Hawaiian operates Boeing 717-200s, Airbus A321neos, and Airbus A330s. Hawaiian will also begin to receive Boeing 787-9 Dreamliners in the coming months.
“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,” said Ben Minicucci, Alaska Airlines CEO in a press release. “Our two airlines are powered by incredible employees, with 90+ year legacies and values grounded in caring for the special places and people that we serve. This is an exciting next step in our journey to elevate the travel experience and expand options for guests.”
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