North America’s fifth largest airline Alaska Airlines will merge with Hawaiian Airlines after signing a $1.9bn acquisition agreement, though the venture will maintain both brands.
The high value acquisition is the latest significant merger in the US aviation industry and is likely to face scepticism from regulators, which are currently in court opposing JetBlue’s merger with Spirit.
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Alaska will grow its fleet to 365 planes through the acquisition.
The airline is paying $18-a-share, and will gain more than 50% control of the aviation market in Hawai’i with the acquisition of the almost 100-year-old airline.
Alaska highlighted that only 12 of the 1,400 flights currently operated by the two airlines overlapped, hinting that traffic will not be cut.
Ben Minicucci, CEO of Alaska Airlines, said: “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.
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By GlobalData“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.”
Though Hawaiian has become an essential part of the island state’s infrastructure, sometimes providing the only connections between certain islands, it has also faced several issues in recent years, including the devastating wildfires in Maui and increased competition, leading it to post consistent losses since 2020, including an adjusted net loss of $54.9m for Q3 2023.
However, Alaska reportedly reassured investors during a presentation that Hawaiian had a steady history of profits before the pandemic, and has said it expected the acquisition to generate high single-digit earnings in the first two years.
Alaska also ensured it highlighted that it would continue a “robust neighbour island service” and increase the number of destinations available through non-stop or one-stop routes from the Hawaiian islands, while continuing Hawaiian’s work investing in local culture and languages.
Peter Ingram, CEO of Hawaiian, said: “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.”
Following the merger, which is expected to close in 12-18 months subject to regulatory approval, the joint company will be based in Alaska’s headquarters in Seattle under the leadership of Minicucci.
The acquisition continues a period of expansion for Airline, which placed its largest order for Boeing aircraft in 2022, adding 52 737 MAXs to its fleet and securing rights for 105 more planes through 2030.
