Alaska Airlines to acquire Hawaiian Airlines in a $1.9B deal, pushing to expand on the West Coast
Alaska Airlines, making its move to expand its reach along the West Coast, has agreed to acquire Hawaiian Airlines in a deal valued at about $1.9 billion. The acquisition, announced on Sunday, is expected to bolster Alaska Airlines’ presence and services, particularly in the Hawaiian islands, and is part of a strategy to increase its share of the U.S. airline market.
Deal details and implications
The purchase values Hawaiian Airlines at $18 per share and includes the assumption of $900 million of the company’s debt. According to a press release, shares of Hawaiian Airlines were priced at $4.86 at the close of trading on Friday, giving the company a market cap of about $250 million. The transaction is expected to close within the next year or 18 months, with the combined company, including Hawaiian Airlines, to be based in Seattle, where Alaska Airlines is headquartered.
The combined company is set to rival other major airlines in the market, promising to offer a combined 365-airplane fleet covering 138 destinations. Hawaiian Airlines CEO, Peter Ingram, highlighted that the additional scale and resources brought by the deal with Alaska Airlines, will allow Hawaiian Airlines to accelerate investments in guest experience and technology while maintaining the Hawaiian Airlines brand. The merger will also triple nonstop or one-stop flights from the Hawaiian islands to destinations throughout North America.
Alaska Airlines’ CEO, Ben Minicucci, emphasized that the company is fully committed to investing in the communities of Hawai’i and maintaining robust Neighbor Island service that Hawaiian Airlines travelers have come to expect. In addition, the deal should bolster earnings within the next two years, with expected “run-rate synergies” of at least $235 million.
Consolidating their brand
Both airlines have stated that they will aim to maintain each of their brand identities under the deal, but will operate under a single platform. The deal is intended to strengthen both airlines’ services and offers, as well as enhance their competitiveness in an ever-evolving and highly competitive market.
A positive outlook for the future
This acquisition is just the latest in a series of mergers and acquisitions that have reshaped the U.S. airline industry in recent years. With the combined strength and resources of both airlines, the deal is expected to create more options and enhance the travel experience for customers in the West Coast and Hawaii.
The announcement comes at a time when the travel industry is slowly recovering from the impact of the COVID-19 pandemic and both airlines are aiming to capitalize on the projected surge in travel demand.
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