Alaska and Hawaiian Airlines aircraft take off simultaneously from San Francisco International Airport (SFO) in San Francisco, California, USA on June 21, 2023.

Tayfun Coskun | Anadolu Agency | Getty Images

Alaska Airlines has agreed to acquire rival Hawaiian Airlines in a $1.9 billion deal as the carriers push ahead with expansion along the West Coast.

Alaska would pay $18 a share for Hawaiian and the acquisition includes $900 million of Hawaiian’s debt, the companies said Sunday. Shares of Hawaiian Airlines closed at $4.86 on Friday, giving the company a market capitalization of about $250 million. They are down nearly 53% so far this year as the airline grapples with challenges such as the Maui wildfires.

“What we saw here was a once-in-a-lifetime opportunity at the valuation we saw Hawaiian at,” Alaska Airlines CFO Shane Tackett said in an interview. He said the deal would also allow the combined companies to become a “market leader” in the Hawaii premium travel market.

“We didn’t see this as an opportunity that we shouldn’t pass up because it might never come up again in our careers,” Tackett said.

The airlines said they expect the transaction to close in 12 to 18 months, assuming regulators approve the deal. President Joe Biden’s Justice Department has taken a tough stance against mergers it sees as anticompetitive, filing a lawsuit to block JetBlue Airways’ planned takeover of discount airline Spirit Airlines. The trial is expected to be completed in the coming days.

The combined company will be based in Seattle, where Alaska Airlines is headquartered, and led by its CEO Ben Minicucci.

The two airlines said they would retain both carriers’ brands but operate under a single platform, combining into a fleet of 365 aircraft covering 138 destinations.

The deal comes seven years after Alaska Airlines acquired Virgin America in a deal worth about $4 billion. Alaska operates Boeing 737s and has spent years downsizing Virgin’s Airbus fleet to streamline its fleet. Buying Hawaiian would bring a complex mix of Boeing and Airbus jets, both narrow-body and wide-body, under Alaska’s roof.

“With the additional scale and resources that this transaction with Alaska Airlines brings, we can accelerate investments in our guest experience and technology while maintaining the Hawaiian Airlines brand,” Hawaiian Airlines CEO Peter Ingram said in the press release.

The merger will allow Alaska Airlines to triple nonstop or one-stop flights from the Hawaiian Islands to destinations across North America.

Alaska Airlines said the deal should boost earnings within the next two years with expected “run-rate synergies” of at least $235 million.

“We are committed to investing in Hawaii’s communities and maintaining the robust neighbor island service that Hawaiian Airlines travelers have come to expect,” Minicucci said in the statement.

REGARD: Tourism on Maui is still not back to full strength since the wildfires

Source : www.cnbc.com

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