Personal Finance News
Alaska and Hawaiian Airlines Merger Moving Foward
Nine months after Alaska Airlines and Hawaiian Airlines announced plans to merge, the proposed deal has cleared a significant regulatory hurdle.
What’s new:
After reviewing the plans for Alaska and Hawaiian Airlines to merge, the U.S. Department of Justice has declined to block the transaction. However, since the deal includes two airlines, the U.S. Department of Transportation will need to approve the plans. Currently, no timeline for when the agency would issue a decision on the matter has been set.
Should the DOT approve the merger, the deal would be subject to customary closing conditions before the two companies could begin operating as one — although, the airlines previously announced plans to keep both brands intact even after integrating the two companies.
About the deal:
In December of last year, Alaska Airlines announced its intent to purchase Hawaiian Airlines in a deal valued at approximately $1.9 billion ($18 per share plus $900,000 in net debt). Plans call for the combined airline to be headed by Alaska Airlines CEO Ben Minicucci and headquartered in Seattle, while Honolulu (HNL) — which Hawaiian Airlines calls home — will remain a key hub for the airline. As noted, the airlines do intend to retain their branding. Nevertheless, Hawaiian Airlines’ HawaiianMiles program is expected to be folded into Alaska’s MileagePlan.
At the time of the merger announcement, the airlines stated they expected the process to take 12 to 18 months.
What they’re saying:
Following the expiration of the DOJ review timeframe, Alaska Airlines released a statement, noting, “This is a significant milestone in the process to join our airlines. During the DOJ’s review, Alaska worked closely with the Hawaii Attorney General to reinforce and expand upon our commitments for the future of Hawaiian Airlines and to Hawaii consumers. These include plans to maintain the Hawaiian Airlines brand and local jobs and continue providing strong service between, to, and from the Islands.”
Additionally, Governor Josh Green of Hawaii issued a statement supporting the merger, writing, “The merger will vastly expand the number of destinations throughout North America for Hawaii residents that can be reached nonstop or one-stop from the islands, and HawaiianMiles members will retain the value of their miles while gaining access to more destinations around the world. I am confident that by the joining of these two airlines, a stronger company will emerge and offer more travel options for Hawaii residents and local businesses — and will enhance competition across the U.S. airline industry.”
My thoughts:
Considering that the Department of Justice recently blocked a merger between JetBlue and Spirit, the fact that the agency is allowing this transaction to proceed is a big win for Alaska and Hawaiian. Of course, it’s easy to see the huge differences between the two deals and why this one would be allowed to proceed.
As for me, I still have questions about what will happen with the co-branded credit card programs for each airline — especially after Hawaiian Airlines just extended a deal with Barclays (Alaska’s cards are issued by Bank of America). Perhaps now that this deal’s closing appears more likely to happen, we’ll get some new details soon.
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