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Alaska Air Group, Inc. (NYSE: ALK), and Hawaiian Holdings, Inc. (NASDAQ: HA) announced Sunday that the airlines have entered into an agreement under which Alaska will acquire Hawaiian for $1.9 billion through the purchase of the latter airline's stock at $18 per share in cash, including Hawaiian's net debt of $900 million.
According to the announcement, both brands will be maintained while operations and networks will be combined.
The announcement came with caveats: Hawaiian Holdings shareholders must still vote to approve the deal, though the boards of both airlines have already done so; the transaction has to meet regulatory requirements; and there is the risk that "either party may terminate the merger agreement or that the closing of the transaction might be delayed or not occur at all," among other risks.
“Since 1929, Hawaiian Airlines has been an integral part of life in Hawaii, and together with Alaska Airlines we will be able to deliver more for our guests, employees and the communities that we serve,” said Peter Ingram, Hawaiian Airlines president and CEO, in a statement. “In Alaska Airlines, we are joining an airline that has long served Hawaii, and has a complementary network and a shared culture of service. With the additional scale and resources that this transaction with Alaska Airlines brings, we will be able to accelerate investments in our guest experience and technology, while maintaining the Hawaiian Airlines brand. We are also pleased to deliver significant, immediate and compelling value to our shareholders through this all-cash transaction. Together, Hawaiian Airlines and Alaska Airlines can bring our authentic brands of hospitality to more of the world while continuing to serve our valued local communities.”
“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 Hawaii travelers,” said Ben Minicucci, Alaska Airlines CEO, in a statement. “We have a longstanding and deep respect for Hawaiian Airlines, for their role as a top employer in Hawaii, and for how their brand and people carry the warm culture of aloha around the globe. Our two airlines are powered by incredible employees, with 90+ year legacies and values grounded in caring for the special places and people that we serve. I am grateful to the more than 23,000 Alaska Airlines employees who are proud to have served Hawaii for over 16 years, and we are fully committed to investing in the communities of Hawaii and maintaining robust Neighbor Island service that Hawaiian Airlines travelers have come to expect. We look forward to deepening this stewardship as our airlines come together, while providing unmatched value to customers, employees, communities and owners.”
The deal is expected to close in 12 to 18 months, according to the announcement. Minicucci will lead the combined organization as CEO, based in Seattle.
The airlines stated that the merger will offer consumers a combination of Alaska Airlines' "high-value, low-fare options" and Hawaiian Airlines' "international and long-haul product."
"For Hawaii residents, the combination will expand service and convenience by tripling the number of destinations throughout North America that can be reached nonstop or one stop from the Islands, while maintaining robust Neighbor Island service and increasing air cargo capacity," said the statement. "Honolulu will become a key Alaska Airlines hub, enabling greater international connectivity for West Coast travelers throughout the Asia-Pacific region with one-stop service through Hawaii."
Loyalty program benefits will be combined as well. "The transaction will connect Hawaiian Airlines’ loyalty members with enhanced benefits through an industry-leading loyalty program for the combined airline, including the ability to earn and redeem miles on 29 global partners and receive elite benefits on the full complement of oneworld Alliance airlines, expanded global lounge access and benefits of the combined program’s co-brand credit card," said the statement.