On December 3, 2023, Alaska Airlines and Hawaiian Air announced that they would be combining, with the former acquiring the latter. Even post-acquisition, however, the two airlines will maintain separate brands.
Continue reading to learn more about the acquisition.
Alaska Airlines to Buy Hawaiian Air in a $1.9 Billion Deal
To acquire Hawaiian Air, Alaska Airlines will pay $1 billion in cash at $18 per share (approximately 3.5-times the current stock price). In addition to that, Alaska Airlines will also assume $0.9 billion in Hawaiian Air’s net debt, bringing the total deal value to approximately $1.9 billion. This represents a multiple of just over 0.7x of Hawaiian Air’s 2022 revenues.
The acquisition has been approved by both airlines’ boards and is now subject to necessary regulatory approvals and the approval by Hawaiian’s shareholders among other things.
The deal is expected to close in 12 to 18 months – i.e. sometime between the end of 2024 Q4 and 2025 Q2. The combined airline will be led by Alaska Airlines CEO Ben Minicucci.
What Will a Combined Alaska Airlines-Hawaiian Air Look Like?
As mentioned earlier, even after the deal and integration are completed, Alaska Airlines and Hawaiian Air will maintain separate brands. Considering the niche that Hawaiian Air (and to an extent Alaska Airlines, although most of its operations are within the contiguous 48 states) serves, this makes perfect sense.
That said, joining forces will allow the airlines to offer better connectivity for passengers traveling between Hawaii and the US mainland. It will also expand Alaska Airlines’ reach into Asia-Pacific thanks to Hawaiian Airlines’ network of routes to Japan and elsewhere.
Currently, Alaska Airlines has a fleet of just over 300 Boeing 737NG and 737 MAX, and Embraer E175 aircraft with over 100 more airframes on order. Hawaiian Air has approximately 60 aircraft including Boeing 717s and Airbus A321neo narrowbodies and A330-200 widebodies; the airline also has a dozen 787-9s on order.
With that, the combined airline group will have a mixed Airbus, Boeing, and Embraer fleet of over 350 aircraft with an additional 150+ aircraft on order.
It will be interesting to see if, over time, Hawaiian Airlines’ Airbus A321neos will be replaced by Boeing 737s. While the aircraft are young, Alaska Airlines recently phased out the last A321neo in its fleet (that it got through its acquisition of Virgin America) to switch to an all-Boeing mainline fleet.
While the press release doesn’t specifically talk about that, it does highlight Alaska Airlines’ Boeing 737 MAX order saying that “In 2022, Alaska Airlines made its largest Boeing fleet order in its 90-year history, focused on the Boeing 737-MAX aircraft, which are 25% more fuel-efficient on a seat-by-seat basis than the aircraft they replace…”
Another thing to keep an eye on is Hawaiian Airlines’ relationship with oneworld. Alaska Airlines joined the alliance in 2021 and chances are that at some point, Hawaiian Airlines will join the alliance too. This would not only result in frequent flyer status recognition across the alliance but also in more opportunities to earn and redeem miles on Hawaiian Airlines flights.
At this point, Hawaiian Airlines flies to two oneworld airlines’ hubs outside the United States – Tokyo in Japan and Sydney in Australia. In Japan, the airline codeshares with the alliance’s member JAL. In Australia, it codeshares with Virgin Australia, the rival of oneworld’s member Qantas.
Lastly, Hawaiian Airlines provides free light meals (i.e. sandwiches) on its non-red-eye flights between Hawaii and the mainland. Alaska Airlines, on the other hand, like most other airlines, only offers buy-on-board service on such routes. It will be interesting to see if, once under Alaska Airlines management, Hawaiian Airlines will discontinue the free service.
Summary
Not that long after it phased out the last Airbus aircraft it had in its fleet post-Virgin America acquisition, the airline announced another acquisition that will return the type to its fleet. Unlike with Virgin America, however, Alaska Airlines plans to maintain a separate Hawaiian Air brand.
With that, once the transactions is completed at the end of 2024 or in the first half of 2025, it will be interesting to see to what extent the airlines will integrate. Just some of the questions I am curious to see the answers to include:
- Will Hawaiian Airlines’ fleet switch from the A321neos to 737s?
- When will Hawaiian Airlines join oneworld and what will the process look like?
- Will Hawaiian Airlines discontinue its free meal service on Hawaii-mainland routes?
