© Reuters. File photo: Hawaiian Airlines planes sit idle on the tarmac at Daniel K. Inouye International Airport due to the business crisis caused by the coronavirus disease (COVID-19) in Honolulu, Hawaii, U.S., on March 28. April 2020. REUTERS/Marco García /File pho
By Akanksha Khushi
(Reuters) -Alaska Air agreed to acquire Hawaiian Airlines for $1.9 billion, including $900 million of Hawaiian Airlines' net debt, the companies said on Sunday, in the latest example of consolidation among U.S. airlines.
Alaska Airlines will acquire Hawaiian Airlines for $18.00 per share in cash, the two companies said, adding that the transaction will unlock more destinations and expand access throughout the Pacific region, the continental United States and globally.
The deal is expected to generate single-digit earnings growth for Alaska Airlines within the first two years without any anticipated material impact on long-term balance sheet metrics.
“This combination is an exciting next step in our collective journey to provide a better travel experience for our guests and expand options for travelers on the West Coast and Hawaii,” said Ben Minicucci, CEO of Alaska Airlines.
The combined organization will be headquartered in Seattle under Minicucci's leadership, with Honolulu becoming a key hub for Alaska Airlines.
The deal comes at a time when the airline industry has been relying on strong demand to mitigate inflationary pressure with higher ticket prices as higher labor and fuel expenses drive up its costs, hurting its profits.
The International Association of Machinists and Aerospace Workers (IAM), a union representing 600,000 employees in the manufacturing and aerospace industries, said it will take all necessary measures to protect the rights of its members at both airlines during and after the acquisition.
“We will be involved in all conversations as this agreement focuses on protecting and defending the interests of our members,” said IAM District 142 President and CEO John Coveny.
Alaska Air (NYSE:) had in October cut its full-year profit outlook due to increased expenses, as major U.S. airlines felt the impact of higher fuel prices, dampening their outlook.