Earlier this month, Alaska Airlines (ALK) and Hawaiian Airlines passed what many see as 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) to acquire Spirit Airlines (SAVE) over antitrust concerns back in February, the Alaska-Hawaiian merger was cleared by the Justice Department on Aug. 20 and is currently being reviewed 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 proceed.
Here is 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 U.S. mainland (or those traveling there for holidays) and cannot monopolize the market and control ticket prices in the same way as the merger of two low-cost airlines.
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That said, United Airlines (UAL) is already sounding its concerns over what such a merger could mean for it.
According to travel and aviation website Skift, United’s Chief Legal Officer Robert Rivkin sent a letter expressing his concerns to DOT Deputy General Counsel Brian Stansbury.
“United has interline, codeshare, pricing strategy and loyalty agreements with Hawaiian,” the letter reads. “The memo didn’t go into more detail about United’s concerns.”
United runs a number of flights to airports across the Hawaiian islands and likely sees a Hawaiian Airlines revived with Alaska’s funds as having the potential to significantly take away its business. None of the three airlines has been commenting publicly on the broken news around Rivkin’s letter.
Hawaiian, which has been reporting a series of unprofitable quarters and lost a total $260 million in 2023, is in desperate need of a turnaround plan.
Even with the post-pandemic pickup, the drop in Japanese travelers to Hawaii during the pandemic was too big of a hit to recover from financially. With an approved deal, Alaska would take on approximately $900 million of Hawaiian's debt and pump 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 job opportunity 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 running the airline under its own name contrary to killing the brand as is more common with such mergers (travelers flying to Hawaii like to see branding with lei flowers rather than ice caps) and create a merged loyalty program between the two airlines.
“The merger will vastly expand the number of destinations throughout North America for Hawaii residents that can be reached nonstop or one-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 thrown all of his support behind the merger, said in his own statement.
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