Checking a bag on Alaska Airlines will get slightly more expensive in the new year.
04.12.2023 - 15:53 / forbes.com / Spirit Airlines / Hawaiian Airlines
It’s just the latest tectonic shift in an airline industry always drifting toward consolidation. North America’s sixth-largest airline, Alaska Air, has reached a deal to buy struggling rival Hawaiian Airlines for $18 per share in an all-cash deal valued at $1.9 billion, including $900 million of Hawaiian’s debt.
Since the pandemic, Hawaiian has had difficulty returning to profitability, hampered by a variety of issues, including a slower-than-expected return of Japanese travelers to Hawaii and the required grounding of up to four Airbus A321neo aircraft at a time for inspection due to an issue with Pratt & Whitney geared turbofan engines. On the company’s most recent earnings call in October, Hawaiian Airlines executives said the Maui wildfires had cost the carrier approximately $25 million in lost revenue.
Shares of Hawaiian Airlines closed on Friday at $4.86, down 64% from a year ago. Following the merger announcement, shares opened on Monday at $13.73, approaching the 52-week high of $13.81.
Alaska Air, which also owns regional airline Horizon Air, intends to keep operating Hawaiian as an independent brand. “This combination is an exciting next step in our collective journey to provide a better travel experience for our guests and expand options for West Coast and Hawai’i travelers,” Alaska Air CEO Ben Minicucci said in a statement.
Of course, it remains to be seen whether this deal will ever take flight. The acquisition requires approval from regulators in a Biden administration that has flexed its antitrust chops in the airline industry. In March, the Department of Justice filed an antitrust lawsuit against budget airline JetBlue to prevent its blockbuster $3.8 billion merger with Spirit Airlines. (That trial is expected to wrap up this month.) And in May, a federal judge rejected a partnership between American Airlines and JetBlue after the government successfully argued that the alliance suppressed competition.
Still, on a Sunday evening call with analysts, Minicucci projected confidence that government would approve the Alaska-Hawaiian deal, citing the two airlines’ 12 overlapping markets and an expanded network that he said would allow for more robust competition with the “Big Four” carriers—American, United, Delta and Southwest. “We are hopeful that it will be seen in a positive light,” he said.
The transaction agreement has been approved by both airlines’ boards. Alaska Air plans to seek approval from Hawaiian’s shareholders in the first quarter of 2024. If it clears Justice Department approval, the deal is expected to close in 12-18 months, or as late as May 2025.
Checking a bag on Alaska Airlines will get slightly more expensive in the new year.
In-flight internet connectivity has come a long way since 2003, when Connexion by Boeing launched and Lufthansa and British Airways became the first airlines to test it out. Airlines depended on ground stations that would relay signals when flying over land, switching to satellite connectivity when flying oceanic. It was slow.
Since the beginning of the 21st century, the United States has watched at least eight commercial airline brands disappear in a series of mergers in the industry.
Alaska Airlines has been in the news lately for the carrier's proposed merger with Hawaiian Airlines, a move that Alaska CEO Ben Minicucci said will "expand options for West Coast and Hawai'i travelers."
Alaska Airlines has launched a new partnership with a Canadian airline, soon benefitting passengers across both sides of the border.
JetBlue became the latest airline on Thursday to expand service to the popular Mexican vacation spot Tulum.
Flight attendants at Southwest Airlines overwhelmingly rejected a new contract over the weekend. The move is the latest in the mounting tensions between cabin crew and U.S. airline management that could result in the industry’s first labor action in more than a decade.
Alaska Airlines’ proposed $1.9 billion acquisition of Hawaiian Airlines, announced earlier this week, has the potential to alter the existing U.S. air travel landscape significantly. Whether that would prove to be for better or worse remains to be seen, but plenty of experts are already weighing in with predictions.
Seattle-based Alaska Airlines recently announced it plans to buy Hawaiian Airlines for the sum of about $1.9 billion—a historic deal that, if finalized, could create both benefits and setbacks for the flying public.
Start-up airlines like Avelo Airlines don’t get the press coverage that larger ones do. Big airlines make splashy billion dollar deals like the announced $1.9 billion purchase of Hawaiian Airlines by Alaska Air.
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A merger between Alaska Airlines and Hawaiian Airlines would place them as the fifth- or sixth-largest airline depending on whether the proposed merger of JetBlue and Spirit goes through.