Alaska and Hawaiian Airlines planes takeoff at the same time from San Francisco International Airport (SFO) in San Francisco, California, United States on June 21, 2023.
Tayfun Coskun | Anadolu Agency | Getty Images
Alaska Airlines has agreed to acquire rival Hawaiian Airlines in a $1.9 billion deal as the carriers make a push to expand along the West Coast.
Alaska would pay $18 a share for Hawaiian and the acquisition includes $900 million of Hawaiian’s debt, the companies said Sunday. Shares of Hawaiian Airlines closed on Friday at $4.86, giving the company a market cap of about $250 million. They are down nearly 53% so far this year as the airline has struggled with challenges including the Maui wildfires.
“What we saw here was a unique opportunity in time at the valuation that we saw Hawaiian at,” said Shane Tackett, Alaska Airlines’ CFO, in an interview. He said the deal would also enable the combined companies to become a “market leader” in the premium-travel Hawaii market.
“We didn’t view this as an opportunity that we shouldn’t let pass because it may not come again in our careers,” Tackett said.
The airlines said they expect the transaction to close in 12 to 18 months, if regulators approve the deal. President Joe Biden’s Justice Department has taken a hard stance against combinations it views as anticompetitive and has sued to block JetBlue Airways’ proposed acquisition of discount carrier Spirit Airlines. A trial is expected to wrap up in the coming days.
The combined company will be based in Seattle, where Alaska Airlines is headquartered, and led by its CEO, Ben Minicucci.
The two airlines said they will keep each carrier’s brand but operate under a single platform, combining into a 365-airplane fleet covering 138 destinations.
The deal comes seven years after Alaska Airlines acquired Virgin America in a deal valued at about $4 billion. Alaska operates Boeing 737s and has spent years whittling down Virgin’s fleet of Airbus planes to streamline its fleet. Purchasing Hawaiian would bring a complex mix of Boeing and Airbus jets, both narrow-body and wide-body planes under Alaska’s roof.
“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,” Peter Ingram, CEO of Hawaiian Airlines, said in the release.
The combination will allow Alaska Airlines to triple nonstop or one-stop flights from the Hawaiian islands to destinations throughout North America.
Alaska Airlines said the deal should bolster earnings within the next two years with at least $235 million of expected “run-rate synergies.”
“We are fully committed to investing in the communities of Hawai’i and maintaining robust Neighbor Island service that Hawaiian Airlines travelers have come to expect,” Minicucci said in the statement.
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