Alaska Air
Group announced a deal to buy
Hawaiian Airlines
for $1.9 billion as consolidation in the industry continues.
Alaska Airlines said it would pay $18 a share in cash and take on $900 million of debt from Hawaiian. It said the merger will allow the combined carrier to offer more destinations for consumers and expand choice in the Pacific region.
“The transaction is expected to enable a stronger platform for growth and competition in the U.S., as well as long-term job opportunities for employees, continued investment in local communities and environmental stewardship,” the company said.
Hawaiian Holdings shares closed Friday at $4.86 each. They are down 52% so far this year.
Alaska said both brands would be preserved in the deal though the headquarters would be in Seattle and the combined company led by Alaska CEO Ben Minicucci. Honolulu would become an Alaska Airlines hub. Together they offer service to 138 destinations, including non-stop service to 29 destinations in the Americas, Asia, Australia, and the South Pacific.
The move comes as
JetBlue Airways
and
Spirit Airlines
face antitrust concerns about their $3.8 billion merger from the Justice Department, which has taken the case to a Boston federal court.
Last month, Spirit CEO Ted Christie, defended the deal as a way to create a stronger alternative to the big four airlines.
Seattle-based Alaska said the combination would expand service in and out of Hawaii by tripling the number of destinations throughout North America that can be reached nonstop or one stop from the island chain. It would also maintain island service and increase air cargo capacity.
The companies estimate $235 million of increased value in the combination, and said it could generate additional earnings in the high single digits in the first two years after it closes, and high-teens after three years, not counting integration costs.
Both company boards have already approved the agreement. Hawaiian Airlines shareholders are expected to vote on it sometime in the first quarter, they said, with closing coming in 12 to 18 months.
BofA Securities and
PJT Partners
advised Alaska Airlines, while
Barclays
advised Hawaiian.
Write to Liz Moyer at [email protected]
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