Alaska Airlines buys Hawaiian Airlines for $1.9 BILLION – including $900M in net debt

Alaska Airlines has signed an agreement to acquire Hawaiian Airlines for $1.9 billion, including $900 million of the airline’s net debt.

According to Sunday’s announcement, Alaska Airlines will acquire Hawaiian Airlines for $18 per share in cash.

The airlines say the deal will unlock more destinations in the Pacific region, the continental United States and globally.

The deal is expected to generate single-digit earnings growth for Alaska Airlines within the first two years without any anticipated material impact on long-term balance sheet metrics.

“This combination is an exciting next step in our collective journey to provide a better travel experience for our guests and expand options for travelers on the West Coast and Hawaii,” said Ben Minicucci, CEO of Alaska Airlines.

He added: “We have a deep and abiding respect for Hawaiian Airlines, for its role as a leading employer in Hawai’i and for how its brand and its people spread the warm aloha culture around the world.”

The combined organization will be headquartered in Seattle under Minicucci’s leadership, with Honolulu becoming a key hub for Alaska Airlines.

A press release announcing the deal touts a “stronger platform for growth and competition in the U.S.,” as well as “Long-term career opportunities for employees, continued investment in local communities and environmental stewardship.’

The combination of complementary domestic, international and cargo networks is poised to expand consumer options on the West Coast and throughout the Hawaiian Islands for the airlines’ combined 54.7 million annual passengers.

The agreement offers expanded service to residents of the 50th state, tripling the number of destinations across North America that can be reached nonstop or with a single stop from the islands.

It also promises more career advancement opportunities, competitive salaries and benefits, and geographic mobility for employees.

In a statement, the nation’s largest flight attendant union, the Association of Flight Attendants-CWA, which represents 6,800 flight attendants in Alaska and 2,200 in Hawaii, said it wanted to ensure the merger would improve conditions for attendants. Of flight.

The International Association of Machinists and Aerospace Workers (IAM) echoed similar sentiments.

“Our Alaska and Hawaiian Airlines members are rightfully proud of the work they have done to make these airlines successful,” said Mike Klemm, IAM District 141 president and CEO.

“We will use all necessary resources to ensure their livelihoods are protected during this acquisition.”

Hawaiian Airlines turns 95 and is the state’s largest airline, with about 150 daily inter-island flights and nonstop flights between Hawaii and 15 U.S. gateway cities, and service to American Samoa, Australia, Cook Islands, Japan, New Zealand, South Korea and Tahiti.

Peter Ingram, president and CEO of Hawaiian Airlines, pledged to “deliver more to our guests, employees and the communities we serve.”

“At Alaska Airlines, we join an airline that has served Hawaii for a long time and has a complementary network and shared service culture. “With the additional scale and resources 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.”

The transaction would be the second airline merger in just over a year and is expected to face close scrutiny from regulators. It comes at a time when the Biden administration has been aggressively challenging such agreements in a wide range of industries dominated by a small number of players. (ARRANGE)

Last year, Frontier Airlines and Spirit Airlines negotiated a merger that failed, setting the stage for JetBlue to acquire Spirit.

JetBlue won a bidding war to buy Spirit for $3.8 billion. However the The Justice Department filed an antitrust lawsuit in federal court in Massachusetts in March.

The lawsuit contends that JetBlue’s plan to eliminate Spirit and merge its planes, routes and employees into its own operations would harm consumers who rely on Spirit’s low fares to pay for their air travel.

“We allege that if this merger is allowed to continue, it will limit options and increase ticket prices for passengers across the country,” Attorney General Merrick Garland said at a news conference.

“And we further allege that the impact of this merger will be especially detrimental to travelers who rely on so-called ultra-low-cost airlines to fly.”

The Justice Department considers Spirit an industry “disruptor,” saying its discount fares have led other airlines, including JetBlue, to reduce fares on competing routes.

“JetBlue’s plan would eliminate the unique competition offered by Spirit – and about half of all ultra-low-cost airline seats in the industry – and leave tens of millions of travelers with higher fares and fewer options,” it reads. in the complaint.