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Merger of Alaska Airlines and Hawaiian Airlines

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Merger of Alaska Airlines and Hawaiian Airlines
InitiatorAlaska Airlines
TargetHawaiian Airlines
TypeMerger
CostUS$1.9 billion
InitiatedDecember 2023
StatusPending

The merger of Alaska Airlines and Hawaiian Airlines is the proposed acquisition of Hawaiian Airlines by Alaska Airlines to create a combined carrier focused on the West Coast of the United States.[1]

The plan was announced in December 2023.[2] Airline industry analysts had promoted the merger for years which would create a combined carrier focused western United States.[3][4][5] The merger would provide Alaska, which is primarily a domestic carrier with narrowbody aircraft, with Hawaiian's widebody jets, pilots, and international networks.[4][6]

The proposed merger was approved by shareholders of Hawaiian Airlines in April 2024. The merger was previously approved by the boards of both Alaska Air Group and Hawaiian Holdings, Inc.[7][8]

Financials

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Under the proposed deal, Alaska will acquire shares of Hawaiian for $1.9 billion in cash along with an assumption of approximately $900 million in outstanding debt, valuing the company at $18 per share.[9][10] The price represented a significant premium over Hawaiian's valuation prior to the deal's announcement which had hit a 52-week low of $4 in October 2023.[11]

Combined route network and branding

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When the merger was announced, the companies overlapped on 12 nonstop routes which they described as minimal.[12] Alaska Airlines emphasized its experience operating an intra-Alaska network including service to 16 destinations not reachable by road while pledging to maintain a robust interisland schedule in Hawaii to neighbor islands.[13]

The merger would provide Alaska, which is primarily a domestic carrier with narrowbody aircraft, with Hawaiian's widebody jets, pilots, and international networks.[14][15] The deal, if approved by regulators, would retain both Alaska Airlines and Hawaiian Airlines as separate brands. The combined company would control approximately 40% of the traffic between Hawaii and the United States mainland.[16]

Under the deal, Hawaiian Airlines would become a member of the Oneworld alliance and the two airlines would operate a combined frequent-flier program.[17] The airlines have confirmed that miles held in Hawaiian's HawaiianMiles frequent flyer program would be converted to Alaska Airlines Mileage Plan scheme at a 1:1 ratio.[18]

Reactions to proposed merger

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A merger between Alaska Airlines and Hawaiian Airlines had long been speculated on by industry insiders and analysts.[19][14][20] The Wall Street Journal speculated that consolidation would lead to higher prices for consumers on flights to Hawaii although this was disputed by the companies.[21]

When the merger was announced, Gov. Josh Green (HI) promised that he and attorney general Anne Lopez would monitor the merger "very closely" adding that both "are very high-quality companies, but ultimately, I will be watching to make sure all of our state's needs are met and all of our workers are cared for."[22] As part of its effort to garner local support for the merger, Alaska Airlines made three key promises to Hawaii residents to maintain the Hawaiian airlines brand, keep all front-line union employees, and protect neighbor island flights.[23]

In February 2024, Richard Bissen (mayor of Maui County), Rick Blangiardi (mayor of the City and County of Honolulu), Derek Kawakami (mayor of Kauai County), and Mitch Roth (mayor of Hawaiʻi County) published an open letter in the Honolulu Star-Advertiser declaring their support for the merger as "good for Hawaiʻi" and enhance service to neighbor islands.[24][25]

Consumer lawsuit

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In April 2024, eight plaintiffs sued Alaska Airlines in an attempt to prevent the deal arguing it would violate U.S. antitrust law.[26] The lawsuit was dismissed by the district court in August 2024 after Judge Derrick Watson ruled that they lacked standing to sue.[27]

Anti-trust concerns

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Under President Biden, the U.S. Department of Justice has worked to prevent further consolidation in the airline industry but as of January 2024, it is unclear whether they will file suit against the merger with analysts noting differences between the proposal and prior proposals opposed by the administration.[16][28][29] Company executives expressed confidence that the combination would receive federal approval.[30]

When the deal was announced, executives expected approval from the Justice Department to take between a year and 18 months.[31] An Securities and Exchange Commission filing in May 2024 indicated that the Justice Department has until August 2024 to make a decision on whether to file a suit against the merger.[32][33]

Regulatory approval

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On August 20, 2024 at 12:01 am ET, the Department of Justice's formal antitrust review period for the merger officially expired meaning that Alaska Airlines had cleared its primary regulatory hurdle to complete the deal.[34] The milestone in the merger saga was viewed as blockbuster news in Hawaii as the home of Hawaiian Airlines and came following three extensions to the review period which was originally slated to end on August 3.[35] Review of the merger now moves to the U.S. Department of Transportation which must also give its approval for the merger to proceed.[36]

References

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  1. ^ Cabanatuan, Michael. "What could Alaska-Hawaiian airlines merger mean for Bay Area travelers?". San Francisco Chronicle. Retrieved March 4, 2024.
  2. ^ Singh, Rajesh Kumar; Khushi, Akanksha; Sen, Anirban; Sen, Anirban (December 4, 2023). "Alaska Air to buy peer Hawaiian for $1.9 billion". Reuters. Retrieved December 4, 2023.
  3. ^ Cabanatuan, Michael. "What could Alaska-Hawaiian airlines merger mean for Bay Area travelers?". San Francisco Chronicle. Retrieved March 4, 2024.
  4. ^ a b Harden, Olivia (December 6, 2023). "Alaska-Hawaiian Airlines merger explained: Cheaper fares, better points, DOJ hurdle". San Francisco Chronicle.
  5. ^ Miller, Courtney (December 3, 2023). "Alaska Airlines should buy Hawaiian Airlines – Contrairy Analysis from 2019". Visual Approach Analytics.
  6. ^ Singh, Rajesh Kumar (December 6, 2023). "US airlines' plans for growth constrained by antitrust concerns". Reuters.
  7. ^ Argel, Matthew Nuttle and Arielle (February 16, 2024). "Hawaiian Holdings receives stockholder approval for merger with Alaska Air Group". KITV Island News. Retrieved June 10, 2024.
  8. ^ "Hawaiian and Alaska Air one step closer to merging". spectrumlocalnews.com. Retrieved June 10, 2024.
  9. ^ "Why the Biden administration may stop the latest airline merger". Christian Science Monitor. ISSN 0882-7729. Retrieved March 4, 2024.
  10. ^ Singh, Rajesh Kumar; Khushi, Akanksha; Sen, Anirban; Sen, Anirban (December 4, 2023). "Alaska Air to buy peer Hawaiian for $1.9 billion". Reuters. Retrieved March 4, 2024.
  11. ^ "Hawaiian Airlines shareholders approve Alaska's $1.9B acquisition". Hawai'i Public Radio. 2024-02-16. Retrieved 2024-06-10.
  12. ^ Silk, Robert (2024-03-12). "Alaska Airlines CEO is confident that the Hawaiian merger will happen". Travel Weekly.
  13. ^ Silk, Robert (2023-12-08). "Hawaiian-Alaska: Airlines will benefit, but can they get the OK to combine?". Travel Weekly.
  14. ^ a b Harden, Olivia (December 6, 2023). "Alaska-Hawaiian Airlines merger explained: Cheaper fares, better points, DOJ hurdle". San Francisco Chronicle. Retrieved March 4, 2024.
  15. ^ Rajesh Kumar Singh (December 6, 2023). "US airlines' plans for growth constrained by antitrust concerns". Reuters. Retrieved March 4, 2024.
  16. ^ a b Koenig, David (December 4, 2023). "Alaska Airlines is buying Hawaiian Airlines. Will the Biden administration let the merger fly?". Associated Press.
  17. ^ "Alaska Airlines and Hawaiian Airlines to Combine, Expanding Benefits and Choice for Travelers Throughout Hawai'i and the West Coast" (Press release). Hawaiian Airlines. December 3, 2023. Retrieved March 4, 2024.
  18. ^ "Alaska Speaks Up on Merger + Our Comparative Look at Mileage Rewards". Beat of Hawaii. 2024-06-05. Retrieved 2024-07-16.
  19. ^ "Alaska and Hawaiian Merge: A Combination I've Dreamed of For Years – Cranky Flier". 2023-12-03. Retrieved 2024-06-10.
  20. ^ Miller, Courtney (December 3, 2023). "Alaska Airlines should buy Hawaiian Airlines – Contrairy Analysis from 2019". Visual Approach Analytics. Retrieved March 4, 2024.
  21. ^ Sider, Jacob Passy and Alison. "The New Math for Your Next Trip to Hawaii". WSJ. Retrieved 2024-06-10.
  22. ^ Honore, Marcel (December 4, 2023). "'We're Liking What We See': How The Alaska-Hawaiian Merger Came Together". Honolulu Civil Beat. Retrieved June 10, 2024.
  23. ^ "Checking in Alaska As It Preps for the Hawaiian Merger – Cranky Flier". 2024-05-31. Retrieved 2024-06-10.
  24. ^ None (2024-02-18). "Column: Hawaiian, Alaska airlines combo is good for Hawaii". Honolulu Star-Advertiser. Retrieved 2024-06-10.
  25. ^ Hawaii, Beat of (2024-02-22). "Who Will Benefit From An Alaska/Hawaiian Airlines Merger?". Beat of Hawaii. Retrieved 2024-06-10.
  26. ^ Scarcella, Mike (April 16, 2024). "US consumers sue to stop Alaska Air, Hawaiian Airlines merger". Reuters.
  27. ^ Scarcella, Mike (August 13, 2024). "US judge throws out consumer lawsuit over Alaska Airlines, Hawaiian merger". Reuters.
  28. ^ "Alaska-Hawaiian merger tests Biden administration's resolve to preserve competition". Alaska Public Media. 2023-12-04. Retrieved 2024-06-10.
  29. ^ Josephs, Leslie (2024-01-19). "Why the JetBlue-Spirit antitrust ruling doesn't spell doom for an Alaska-Hawaiian merger". CNBC. Retrieved 2024-06-10.
  30. ^ Hitt, Christine (2024-04-10). "Alaska and Hawaiian airlines are laying the groundwork for merger approval". Travel Weekly.
  31. ^ Honore, Marcel (2023-12-04). "'We're Liking What We See': How The Alaska-Hawaiian Merger Came Together". Honolulu Civil Beat. Retrieved 2024-06-10.
  32. ^ "Hawaiian and Alaska Air one step closer to merging". spectrumlocalnews.com. Retrieved June 10, 2024.
  33. ^ "Deadline effectively set for Justice Department to decide on Alaska-Hawaiian deal". Hawai'i Public Radio. 2024-05-09. Retrieved 2024-07-16.
  34. ^ Schaefers, Allison (2024-08-20). "Hawaiian-Alaska airlines proposed merger clears main regulatory hurdle". Honolulu Star-Advertiser. Retrieved 2024-08-20.
  35. ^ Schaefers, Allison (2024-08-20). "Hawaiian-Alaska airlines proposed merger clears main regulatory hurdle". Honolulu Star-Advertiser. Retrieved 2024-08-20.
  36. ^ Josephs, Leslie (2024-08-20). "Alaska Airlines and Hawaiian Airlines merger clears Justice Department hurdle, now faces DOT". CNBC. Retrieved 2024-08-20.
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