Alaska and Hawaiian Airlines planes takeoff at the identical time from San Francisco International Airport (SFO) in San Francisco, California, United States on June 21, 2023.
Tayfun Coskun | Anadolu Agency | Getty Images
Alaska Airlines has agreed to accumulate rival Hawaiian Airlines in a $1.9 billion deal because the carriers make a push to expand along the West Coast.
Alaska would pay $18 a share for Hawaiian and the acquisition includes $900 million of Hawaiian’s debt, the businesses said Sunday. Shares of Hawaiian Airlines closed on Friday at $4.86, giving the corporate a market cap of about $250 million. They’re down nearly 53% to this point this yr because the airline has struggled with challenges including the Maui wildfires.
“What we saw here was a novel opportunity in time on the valuation that we saw Hawaiian at,” said Shane Tackett, Alaska Airlines’ CFO, in an interview. He said the deal would also enable the combined corporations to develop into a “market leader” within the premium-travel Hawaii market.
“We didn’t view this as a chance that we shouldn’t let pass because it might not come again in our careers,” Tackett said.
The airlines said they expect the transaction to shut in 12 to 18 months, if regulators approve the deal. President Joe Biden’s Justice Department has taken a tough stance against combos it views as anticompetitive and has sued to dam JetBlue Airways‘ proposed acquisition of discount carrier Spirit Airlines. A trial is anticipated to wrap up in the approaching days.
The combined company can be based in Seattle, where Alaska Airlines is headquartered, and led by its CEO, Ben Minicucci.
The 2 airlines said they may keep each carrier’s brand but operate under a single platform, combining right into a 365-airplane fleet covering 138 destinations.
The deal comes seven years after Alaska Airlines acquired Virgin America in a deal valued at about $4 billion. Alaska operates Boeing 737s and has spent years whittling down Virgin’s fleet of Airbus planes to streamline its fleet. Purchasing Hawaiian would bring a posh mixture of Boeing and Airbus jets, each narrow-body and wide-body planes under Alaska’s roof.
“With the extra scale and resources that this transaction with Alaska Airlines brings, we’ll give you the chance to speed up investments in our guest experience and technology, while maintaining the Hawaiian Airlines brand,” Peter Ingram, CEO of Hawaiian Airlines, said in the discharge.
The mixture will allow Alaska Airlines to triple nonstop or one-stop flights from the Hawaiian islands to destinations throughout North America.
Alaska Airlines said the deal should bolster earnings inside the following two years with at the least $235 million of expected “run-rate synergies.”
“We’re fully committed to investing within the communities of Hawai’i and maintaining robust Neighbor Island service that Hawaiian Airlines travelers have come to expect,” Minicucci said within the statement.
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