Alaska Airlines has officially completed its $1.9 billion acquisition of Hawaiian Airlines, creating the largest airline merger in the U.S. in almost a decade. Alaska Air Group CEO Ben Minicucci announced the completion of the acquisition on Wednesday, hailing it as a "historic day" for the two carriers, which now embark on a path to integration. The merger positions Alaska Airlines as the fifth-largest airline in the country, expanding its reach across the Pacific and consolidating its presence in North America.
"This is a historic day for Alaska Airlines as we officially join with Hawaiian Airlines," Minicucci said in a statement. "Alaska and Hawaiian share tremendous pride in connecting communities with award-winning service, and we look forward to inviting more guests on board to experience what makes both brands unique." The acquisition was finalized after the U.S. Department of Transportation (DOT) gave its approval, requiring the airlines to maintain key Hawaiian routes and uphold consumer protections for the next six years.
The merger, first announced in December, successfully navigated a challenging regulatory environment. Given the Biden administration's aggressive stance on airline consolidation, many industry observers anticipated potential legal hurdles similar to the Department of Justice's (DOJ) decision to block the JetBlue-Spirit merger earlier this year. However, the DOJ ultimately chose not to block Alaska Airlines' acquisition of Hawaiian, allowing the deal to proceed unchallenged.
Seattle-based Alaska Airlines now adds Hawaiian Airlines' routes and fleet to its portfolio, bolstering its capacity with access to Hawaiian's wide-body aircraft, which are crucial for long-haul flights across the Pacific. The combined entity will operate more than 33,000 employees and maintain hubs in both Seattle and Honolulu, with Honolulu set to become Alaska's second-largest hub. "It's just a few more arrows in our quiver on how we deploy airplanes across our entire network," Minicucci told reporters, emphasizing the operational flexibility that the deal brings. "Putting the right airplane in the right market to deliver the best results for the combined entity."
While the merger promises greater competition and enhanced service for consumers, the airlines will continue to operate as separate entities for the time being, with no immediate changes to loyalty programs or reservations systems. Frequent flyer miles earned in either Alaska's or Hawaiian's programs will remain secure and transferrable between the two. Both brands are expected to work towards securing a single operating certificate from the Federal Aviation Administration (FAA) in the coming months, a process that will take time but is crucial for fully integrating their operations under one banner.
Minicucci also highlighted that the merger would yield significant financial synergies for the combined entity, estimating that Alaska Airlines would see at least $235 million in run-rate synergies by year three. The additional fleet capacity and expanded route network are expected to provide a competitive edge, particularly in trans-Pacific travel and flights between the Hawaiian Islands and the U.S. mainland.
Despite the optimism surrounding the deal, the airline industry has faced turbulence in recent years. The rise of ultra-low-cost carriers, fluctuating demand due to the pandemic, and evolving consumer preferences have pressured legacy airlines to find new ways to remain competitive. Alaska Airlines' acquisition of Hawaiian represents a strategic move to expand its service offerings and improve its long-term financial standing.
The merger has not been without its challenges. As part of the regulatory approval, Alaska and Hawaiian agreed to several conditions to protect consumers, including maintaining existing service on key Hawaiian routes and ensuring competitive access at Honolulu's airport. The agreement also includes provisions to provide travel credits or frequent flyer miles in cases of travel disruptions caused by the airline.
As of Wednesday, Hawaiian Airlines' stock was officially de-listed from the Nasdaq, marking the end of an era for the standalone airline. Alaska Air Group's stock will continue to trade under the ALK ticker symbol on the New York Stock Exchange.
The combined airline is now positioned to be a dominant player in Pacific travel, connecting the U.S. mainland with Hawaii, Asia, and beyond. However, with increased competition from other major airlines and low-cost carriers, Alaska Airlines will need to balance its expanded operations with the high expectations of travelers and regulators alike.
