• Source: Merger of Alaska Airlines and Hawaiian Airlines

On December 3, 2023, Alaska airlines" target="_blank">Airlines announced plans to acquire Hawaiian airlines" target="_blank">Airlines. Airline industry analysts had promoted the merger for years, which would create a combined carrier focused on the West Coast of the United States. The merger would provide Alaska, which is primarily a domestic carrier with narrowbody aircraft, with Hawaiian's widebody jets, pilots, and international networks.
The proposed merger was approved by shareholders of Hawaiian airlines" target="_blank">Airlines in April 2024. The merger was previously approved by the boards of both Alaska Air Group and Hawaiian Holdings, Inc. In August 2024, the proposed merger received de-facto approval from the Department of Justice. In September 2024, the Department of Transportation officially cleared the deal allowing it to close. On September 18, 2024, the merger was completed.




Financials


Under the proposed deal, Alaska will acquire shares of Hawaiian for $1.9 billion in cash along with an assumption of approximately $900 million in outstanding debt, valuing the company at $18 per share. The price represented a significant premium over Hawaiian's valuation prior to the deal's announcement which had hit a 52-week low of $4 in October 2023.
The deal is widely viewed as a lifeline for Hawaiian airlines" target="_blank">Airlines which has experienced declining revenue and a shaky bottomline since COVID-19.




Combined route network and branding


When the merger was announced, the companies overlapped on 12 nonstop routes which they described as minimal. Alaska airlines" target="_blank">Airlines emphasized its experience operating an intra-Alaska network including service to 16 destinations not reachable by road while pledging to maintain a robust interisland schedule in Hawaii to neighbor islands.
The merger would provide Alaska, which is primarily a domestic carrier with narrowbody aircraft, with Hawaiian's widebody jets, pilots, and international networks. The deal, if approved by regulators, would retain both Alaska airlines" target="_blank">Airlines and Hawaiian airlines" target="_blank">Airlines as separate brands. The combined company would control approximately 40% of the traffic between Hawaii and the United States mainland.




Loyalty program integration


Under the deal, Hawaiian airlines" target="_blank">Airlines would become a member of the Oneworld alliance and the two airlines" target="_blank">airlines would operate a combined frequent-flier program. The airlines" target="_blank">airlines have confirmed that miles held in Hawaiian's HawaiianMiles frequent flyer program would be converted to Alaska airlines" target="_blank">Airlines Mileage Plan scheme at a 1:1 ratio. Those who qualify for "Pualani Elite" statuses in HawaiianMiles would see their elite status transferred to Mileage Plan. Analysts noted that the combined program would benefit HawaiianMiles members by making earned miles more valuable and increasing redemption opportunities.




Reactions to proposed merger


A merger between Alaska airlines" target="_blank">Airlines and Hawaiian airlines" target="_blank">Airlines had long been speculated on by industry insiders and analysts. The Wall Street Journal speculated that consolidation would lead to higher prices for consumers on flights to Hawaii although this was disputed by the companies.




= Support from political leaders

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When the merger was announced, Gov. Josh Green (D-HI) promised that he and attorney general Anne Lopez would monitor the merger "very closely" adding that both "are very high-quality companies, but ultimately, I will be watching to make sure all of our state's needs are met and all of our workers are cared for." Green, along with Governors Jay Inslee of Washington State and Tina Kotek of Oregon, later jointly sent a letter to the Department of Transportation expressing strong support for the merger.
As part of its effort to garner local support for the merger, Alaska airlines" target="_blank">Airlines made three key promises to Hawaii residents to maintain the Hawaiian airlines" target="_blank">airlines brand, keep all front-line union employees, and protect neighbor island flights.
In February 2024, Richard Bissen (mayor of Maui County), Rick Blangiardi (mayor of the City and County of Honolulu), Derek Kawakami (mayor of Kauai County), and Mitch Roth (mayor of Hawaiʻi County) published an open letter in the Honolulu Star-Advertiser declaring their support for the merger as "good for Hawaiʻi" and enhance service to neighbor islands.




= Consumer lawsuit

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In April 2024, eight plaintiffs sued Alaska airlines" target="_blank">Airlines in an attempt to prevent the deal arguing it would violate U.S. antitrust law. The lawsuit was dismissed by the district court in August 2024 after Judge Derrick Watson ruled that they lacked standing to sue.




= Competitor reactions

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United airlines" target="_blank">Airlines raised concerns about how the merger would affect its ability to partner with Hawaiian airlines" target="_blank">Airlines on inter-island flights with the Department of Transportation on August 27 according to a disclosure. Analysts noted that United is currently the largest carrier airline between the mainland and Hawaii and "the fact that United views this as bad for them underscores that it likely strengthens competition".




Regulatory approval


Under President Biden, the U.S. Department of Justice has worked to prevent further consolidation in the airline industry but it was initially unclear whether they would file suit against the merger with analysts noting differences between the proposal and prior proposals opposed by the administration. Company executives expressed confidence that the combination would receive federal approval.




= Department of Justice approval

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When the deal was announced, executives expected approval from the Justice Department to take between a year and 18 months. An Securities and Exchange Commission filing in May 2024 indicated that the Justice Department has until August 2024 to make a decision on whether to file a suit against the merger.
On August 20, 2024 at 12:01 am ET, the Department of Justice's formal antitrust review period for the merger officially expired meaning that Alaska airlines" target="_blank">Airlines had cleared its primary regulatory hurdle to complete the deal. The milestone in the merger saga was viewed as blockbuster news in Hawaii as the home of Hawaiian airlines" target="_blank">Airlines and came following three extensions to the review period which was originally slated to end on August 3.




= Department of Transportation approval

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Following Department of Justice approval, review moved to the U.S. Department of Transportation (DOT) which must also give its approval for the merger to proceed. The Association of Flight Attendants which represents crew at both carriers described the DOT process as "typically […] a perfunctory approval".
In September 2024, the DOT approved the merger with conditions. To secure DOT approvals, the carriers agreed to maintain existing service on key routes, protect the value of loyalty program rewards, and ensure competitive access at the Honolulu hub airport. The department's approval marks the final regulatory hurdle for the two airlines" target="_blank">airlines. The carriers stated they expected to close the deal in the days following this approval, and the merger was completed on September 18, 2024.




References

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