- Alaska Airlines announced the acquisition of Hawaiian Airlines for $1.9 billion, marking a significant consolidation in the aviation industry.
- The merger, currently under regulatory scrutiny, aims to expand national reach and improve consumer access to destinations.
- Concerns arise over the impact on competition and consumer prices, with industry experts and unions closely monitoring the deal's implications.
Alaska Airlines and Hawaiian Airlines Merge in a $1.9 Billion Deal
SEATTLE — Alaska Airlines has reached a landmark agreement to purchase Hawaiian Airlines for a total value of $1.9 billion, as declared by the executives of both airlines. The acquisition involves Alaska Air Group paying $18 per share in cash. Ben Minicucci, CEO of Alaska Airlines, emphasized the shared heritage and values of the two companies, each boasting 90 years of service, highlighting their commitment to community connectivity.Peter Ingram, CEO of Hawaiian Airlines, noted the expansion of Hawaiian Airlines over the years, including a new hub in Maui and increased international flights. However, Ingram pointed out the limitations in offering mainland destinations, a gap that the Alaska Airlines merger is set to fill. This deal is seen as a unique opportunity, considering the significant role of transportation in both Alaska and Hawaii.
Anticipating Close Scrutiny from Regulators Amid Market Consolidation Concerns
This merger, the second major airline union in just over a year, is expected to face stringent examination from regulators. The Biden administration has been actively challenging such consolidations, especially in sectors with limited major players. A recent example includes the ongoing trial against the JetBlue-Spirit Airlines merger, raising questions about the timing and appropriateness of the Alaska-Hawaiian deal.
Aviation analyst Henry Harteveldt suggests that the Biden administration might not heavily oppose this merger due to the smaller sizes of Alaska and Hawaiian Airlines compared to the industry giants. However, Scott Keyes from Going.com warns of potential negative impacts on consumer flight costs, citing reduced competition as a concern.
Future Prospects and Operational Plans
Upon approval, the airlines will operate under one certificate but will continue as distinct brands. Ingram stressed the importance of preserving the Hawaiian brand, given its strong local significance. The merger, according to Minicucci, won't lead to union job losses, with minimal overlap in their route networks. Alaska Airlines also plans to establish a significant regional headquarters in Hawaii.Unions representing various airline employees are scrutinizing the merger's impact on their members. The Association of Flight Attendants-CWA and the International Association of Machinists and Aerospace Workers have expressed their commitment to protecting workers' interests during this acquisition.
Comparing Past Mergers and Positioning in the Industry
Alaska Airlines, currently the fifth-largest carrier in the nation, may retain its ranking post-merger, recalling its previous acquisition of Virgin America in 2017. The deal with Hawaiian Airlines is anticipated to strengthen Alaska Airlines' position in the market, potentially challenging larger airlines and influencing fare structures.Minicucci revealed that discussions about the merger began earlier this year, with the Hawaiian board unanimously approving the deal. Drawing from Alaska's experience with Virgin America, the transaction's completion might take 12 to 18 months, pending regulatory approvals and other formalities. This merger, therefore, represents a significant development in the constantly evolving landscape of the aviation industry.
