Alaska Airlines Will Acquire Hawaiian Airlines In Yet Another Airline Industry Merger
We may be heading for another regulatory battle in the airline industry, as Alaska Air Group has agreed to buy rival Hawaiian Airlines for $1.9 billion.
According to the two companies, Alaska Airlines will pay $18 a share for Hawaiian and take on $900 million in debt.
Hawaiin Airlines Has Struggled
Shares of Hawaiin Airlines have tanked since the Maui wildfires and closed Friday at $4.86 a share. That number gives the airline a market capitalization of $250 million, which is down nearly 53% this year.
In addition to the wildfires, Hawaiian Airlines has seen increased competition from Southwest Airlines, which has increased its service to Hawaii in recent years.
Hawaiian Airlines has posted net losses in all but one quarter since the start of 2020, even as other airlines’ profits have returned to normal following the COVID-19 pandemic.
“What we saw here was a unique opportunity in time at the valuation that we saw Hawaiian at,” said Shane Tackett, Alaska Airlines’ CFO.
A Boon For Alaska Airlines
According to Tackett, Alaska Airlines will now become the “market leader” in the premium-travel Hawaii market.
Hawaiian Airlines stock was up 180% on Monday, rising as high as $13.57 a share. That number is still below the proposed purchase price of $18 per share.
The Deal Could Face Regulatory Scrutiny
While the two companies have agreed to the deal, a merger between the two companies is still far from certain.
Under President Joe Biden’s Justice Departments, airline carriers have faced increased scrutiny.
Earlier this year, the Justice Department won a lawsuit to break up a regional partnership between JetBlue Airways and American Airlines.
The DOJ has also sued to block a proposed acquisition of Spirit Airlines by JetBlue. That trial is expected to wrap up soon.
On a call with analysts on Sunday evening, Alasaka CEO Ben Minicucci was confident that the deal would get approved.
“We are hopeful that it will be seen in a positive light,” he said.
How The Merger Will Work
Under the new agreement, both brands will continue to operate. They will do so, however, under a single platform that combines into a 365-airplane fleet covering 138 destinations.
“The Hawaiian brand will remain an important part of our home state with Honolulu becoming a strategic hub for the combined company and expanded service for Hawaii residents,” Hawaiian CEO Peter Ingram said on the call Sunday.