Earlier this month, Alaska Airlines (Mayor) and Hawaiian Airlines overcame what many consider a major hurdle toward an acquisition valued at $1.9 billion, or $18 per share.
While a federal judge blocked a similar proposal for JetBlue (JBLU) acquire Spirit Airlines (SAVE) On August 20, the Justice Department cleared the Alaska-Hawaii merger due to antitrust concerns raised in February and it is currently under review by the Department of Transportation (DOT). Shares of both companies have been on an upward trajectory amid what many see as increasing chances that the merger will be allowed to go through.
Here's the latest on the proposed merger
The biggest difference between the failed JetBlue-Spirit merger is that both airlines serve very specific populations outside the continental United States (or those traveling there for vacation) and cannot monopolize the market and control ticket prices in the same way that the merger of two low-cost carriers can.
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That said, United Airlines (UAL) He has already expressed concerns about what such a merger could mean for him.
According to the travel and aviation website Skift, United's chief legal officer, Robert Rivkin I sent a letter expressing their concerns to DOT Deputy General Counsel Brian Stansbury.
“United has interline, codeshare, pricing strategy and loyalty agreements with Hawaiian,” the letter reads. “The memo did not go into further detail about United’s concerns.”
United operates several flights to airports in the Hawaiian Islands, and the Alaska-funded revival of Hawaiian Airlines likely has the potential to take a lot of business away from it. None of the three airlines have commented publicly on the news of Rivkin's letter.
Hawaiian, which has been reporting a series of unprofitable quarters and lost a total of $260 million in 2023, is in desperate need of a turnaround plan.
Even with the post-pandemic recovery, the drop in Japanese travelers to Hawaii during the pandemic was too big a blow to recover from financially. Under an approved deal, Alaska would assume roughly $900 million of Hawaii’s debt and invest its own resources into growing the customer base traveling to the islands.
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Alaska Airlines explains its future plans
“We continue to believe this combination will enable a stronger platform for growth and competition in the United States, long-term employment opportunities for employees, and continued investment in local communities and environmental stewardship,” Alaska Airlines said of the proposed merger earlier this year.
Alaska also said that even after acquiring Hawaiian, it would continue to operate the airline under its own name rather than dropping the branding as is more common with such mergers (travelers flying to Hawaii like to see the branding with lei flowers instead of ice caps) and creating a merged loyalty program between the two airlines.
“The merger will greatly expand the number of destinations across North America that Hawaii residents can reach nonstop or with a single stop from the islands, and HawaiianMiles members will retain the value of their miles while gaining access to more destinations around the world,” Hawaiian Governor Josh Green, who has given his full support to the merger, said in his own statement.
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