Alaska Air to buy Hawaiian Airlines, fortifying 5th largest U.S. carrier

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Alaska Air Group will acquire Hawaiian Airlines in a major strategic shakeup for both carriers as they forge a path in the post-pandemic world. The deal is valued at $1.9 billion, which includes Alaska’s offer for Hawaiian  at $18 per share in cash and is inclusive of $900 million of Hawaiian’s net debt.

The deal reignites U.S. airline consolidation at a time when the appetite of political leaders to bless industry mergers remains in question. The Department of Justice is currently suing to block the union of JetBlue Airways and Spirit Airlines.

Related: Alaska Airlines, finally all-Boeing, ventures beyond the recovery

Alaska and Hawaiian will continue operating under separate brands and will create a combined fleet of 365 Boeing 737s, 717s, Airbus A321neos, A330-200s, and Embraer E175s. The scale of the new unified carrier fortifies Alaska’s fifth place position behind United Airlines, Delta Air Lines, American Airlines and Southwest Airlines, who control more than 80% of the overall U.S. airline market.
The decision to maintain independent brands rooted in the identities of the 49th and 50th U.S. states differs from Alaska’s strategy of consolidating and phasing out Virgin America’s brand, which it formally acquired in 2017.

The deal also marks a major shift in Alaska’s strategy, giving the airline an increasingly complex overall fleet to manage, including widebody aircraft for flying to destinations in Asia-Pacific at a time when Alaska is facing greater growth constraints in its key U.S. west coast markets. The Seattle-based carrier in September completed a major fleet simplification, excising the last of its Airbus single-aisle fleet in a transaction for 10 A321neos to American Airlines. The deal will return 18 A321neos to Alaska Air Group’s fleet once the transaction is complete. 

Hawaiian has struggled coming out of the pandemic with the exhaustion of pent-up leisure demand, the devastating fires on Maui earlier this year, and the tenuous availability of its Pratt & Whitney PW1100G-powered A321neo fleet with required inspections. The carrier is in the midst of a significant fleet transformation, is expected to induct service with its first 787-9 in 2024 and had been expected to decide on a replacement for its workhorse interisland 717 feet by the end of 2023 or early 2024.

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