Despite a Potential Regulatory Battle, Alaska Airlines to Buy Hawaiian Airlines for $1.9 Billion

Alaska Airlines is set to buy Hawaiian Airlines for $1.9 billion, despite a possible regulatory battle. This marks the second proposed airline merger in less than two years.

Alaska Airlines is set to pay $18 per share plus take Hawaiian’s $900 million debt according to the two airlines’ announcement on Sunday.

Hawaiian has faced multiple challenges, including the impact of Southwest Airlines’ expansion in Hawaii, a slow recovery in Asia post-pandemic, and the additional setback of the Maui wildfires.

While different airlines showed improved financial performance since travel restrictions waned, things are different for Hawaiian Airlines. Examining Hawaiian Airlines’ financial performance since the beginning of 2020 reveals net losses in all but one quarter. 

Hawaiian’s CFO Shane Tacket said, “What we saw here was a unique opportunity in time at the valuation that we saw Hawaiian at.” Tacket added that the deal would enable both companies to become a “market leader” in Hawaii’s premium travel market. 

Hawaiian and Alaska Airlines Potentially Faces Regulatory Hurdles

Airline mergers faced strong opposition from the federal government. Earlier this year, the Justice Department successfully dismantled the Northeast Alliance by American Airlines and JetBlue Airways. In addition to this, the Justice Department also sued JetBlue Airways to stop its proposed takeover of Spirit Airlines. 

And the reason is the possibility of losing competition in the airline industry. In the United States, four airlines namely American, United, Delta, and Southwest control around 80% of the market. And this control of the industry is mostly a result of years of mergers.  

According to Hawaiian and Alaska, if things go well, the deal is expected to become a reality within 12-18 months. 

Alaska CEO Ben Minicucci expressed his confidence that the deal is going to be a success citing 12 overlapping markets. He said, “We are hopeful that it will be seen in a positive light.” Minicucci also said that once the deal is final, the combined company will be based in Seattle, where Alaska Airlines is based. 

The two airlines are keeping each other’s brands. However, Alaska and Hawaiian are set to operate on a single platform.