Alaska Airlines has announced a plan to acquire Hawaiian Airlines for $1.9 billion, a move that would expand its network and strengthen its market position.
The deal, including debt, is set to increase Alaska’s domestic market share by more than 25% and enhance its presence in the lucrative Asia Pacific region. Hawaiian Airlines’ parent company, Hawaiian Holdings, saw its shares nearly triple in premarket trading following the announcement.
The proposed acquisition, however, faces potential regulatory hurdles. The Biden administration’s aggressive enforcement of antitrust laws raises questions about the deal’s approval. Past efforts to consolidate within the airline industry, such as the attempted merger between JetBlue and Spirit Airlines, have met with resistance from the U.S. Justice Department.
Despite these challenges, the merger is seen as a strategic move for both companies. Alaska Airlines aims to leverage Hawaiian Airlines’ strong network in Hawaii and its routes to Asia, Australia, and New Zealand. Hawaiian Airlines, on the other hand, would benefit from Alaska’s extensive domestic network. The plan also includes retaining the Hawaiian brand, a departure from Alaska’s previous merger strategies.
The acquisition is expected to provide more travel options for passengers, with a combined service to 138 destinations. However, concerns have been raised about the impact on competition, particularly in Hawaii, where the merged entity would control a significant market share.
The deal’s impact on employees and unions is also a key consideration. Unions representing workers at both airlines have not taken a stance, emphasizing the need to ensure that the merger benefits employees as well as shareholders and consumers.
Alaska Airlines intends to put the deal to a vote of Hawaiian investors in early next year. If approved, the transaction could take 12 to 18 months to complete, with Alaska Airlines retaining its Seattle headquarters under the leadership of CEO Ben Minicucci.