Alaska Airlines to buy Hawaiian Airlines for $1.9B

an airliner
An Airbus A330 jet operated by Hawaiian Airlines (Courtesy Hawaiian Airlines)

Alaska Airlines is buying Hawaiian Airlines for $1.9 billion. The companies announced the proposed merger Sunday, at a press conference in Honolulu.

The combined organization will be based in Seattle under the leadership of Alaska Airlines CEO Ben Minicucci.

“As the two airlines rooted in the 49th and 50th state, both of which are uniquely reliant upon air travel, Alaskan and Hawaiians share a great deal in common,” Minicucci said.

At the press conference, he called out the friendship between late Hawaii and Alaska senators Daniel Inouye and Ted Stevens, and the political bonds shared by the native Hawaiian and Alaska Native groups. He said the airlines share a common corporate culture.

“We are aligned in the way we do business, the way in which we treat our employees, our engagement and support to the communities we serve,” he said.

Hawaiian Airlines serves about half the inter-island traffic in the state. Peter Ingram, Hawaiian Airlines’ president and CEO, says Honolulu will soon be an Alaska Airlines hub.

“This is the biggest announcement in Hawaiian’s history, and that’s saying a lot for a 94-year-old company,” Ingram said. “Our shared similarities, our people, and our values run deep, and that is what will ensure a prosperous future for both brands.”

The CEOs of each company say it will be 12 to 18 months before customers notice any changes, with schedules, frequent flyer programs and airline names staying the same. Minicucci promises the Hawaiian name will stay even after the merger is complete.

“The Hawaiian Airlines brand will remain, not only in name, but also in the distinctive branding that appears on the Hawaiian airplanes, at airports and other locations, and in the experience enjoyed by Hawaiian Airlines passengers, partners, employees, and the communities it serves,” he said.

It is very unusual in the industry for a purchased airline to keep its name and branding, according to Hawaii News Now business reporter Howard Dicus.

“It’s virtually unheard of,” Dicus said.

Dicus compared the promise to a combined tail design when United Airlines merged with Continental in 2010.

“This is more than a compromise. This is a recognition that the Hawaiian brand name has value,” he said.

With the deal, Alaska is picking up $1 billion in equity and $900 million in debt with Hawaiian Airlines. Minicucci said conversations on a price began early this year. The price translates to $18 per share, which is more than four times what Hawaiian Airlines had been trading at, which was only $4 per share.

“Today we have a deal because we agreed on a price that was fair, that valued the company at the right place,” Minicucci said. “And airline shares have been very volatile and so we took that aside to say. ‘What is the company actually valued at?’ The price that we offered was fair.”

Alaska has a larger workforce, with about 23,000 employees compared to Hawaiian’s 7,000.  Ingram said job protection was part of the deal.

“It was important to us at Hawaiian to ensure that Alaska will maintain and grow union jobs in Hawaii, retain flight crew bases and operations in Hawaii, with Honolulu becoming a strategic hub for the combined company,” Ingram said.

Alaska has 300 planes now, primarily Boeing 737s. The airline will get 60 more aircraft from Hawaiian, many of which are wide-body jets for international flights.

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