Alaska Airlines to Acquire Hawaiian Airlines, Expanding Reach and Enhancing Services

Alaska Airlines to Acquire Hawaiian Airlines, Expanding Reach and Enhancing Services

Seattle, WA and Honolulu, HI – In a landmark move for the aviation industry, Alaska Air Group, Inc. (NYSE: ALK) and Hawaiian Holdings, Inc. (NASDAQ: HA) have announced a definitive agreement under which Alaska Airlines will acquire Hawaiian Airlines. The transaction, valued at approximately $1.9 billion, inclusive of $0.9 billion of Hawaiian Airlines net debt, represents a significant step in expanding services and benefits for travelers across Hawaii and the West Coast.

Combining Strengths for Enhanced Services

The acquisition will see the integration of two of the most iconic airlines in the United States, both deeply rooted in their respective states and known for their commitment to quality service. The combined company will maintain the strong, high-quality brands of Alaska Airlines and Hawaiian Airlines, supported by a single, compelling loyalty offering. This merger is set to create a fleet of 365 narrow and wide-body airplanes, enabling guests to reach 138 destinations through combined networks and more than 1,200 destinations through the oneworld Alliance.

Strategic Expansion and Customer Benefits

The combination of Alaska Airlines and Hawaiian Airlines is poised to offer substantial benefits to their combined 54.7 million annual passengers. Key aspects of this strategic move include:

• Preserving Outstanding Brands: Both airlines will maintain their industry-leading identities while integrating into a single operating platform. This integration aims to preserve the exceptional service and hospitality that both airlines are known for.
• Enhanced Product Offering: The merger will preserve and expand high-quality product offerings with a range of cabin classes, providing greater choice between Alaska Airlines' high-value, low-fare options and Hawaiian Airlines' international and long-haul products.
• Expanded Service for Hawaii: The combination will triple the number of destinations that can be reached nonstop or with one stop from the Hawaiian Islands, while maintaining robust Neighbor Island service and increasing air cargo capacity.
• Strategic Honolulu Hub: Honolulu is set to become a key hub for Alaska Airlines, enhancing international connectivity for West Coast travelers with one-stop service through Hawaii.
• Increased Loyalty Program Benefits: The transaction will connect Hawaiian Airlines’ loyalty members with enhanced benefits through an industry-leading loyalty program, including the ability to earn and redeem miles on global partners and receive elite benefits on the full complement of oneworld Alliance airlines.

Commitment to Employees and Communities

The merger underscores a commitment to growth in union-represented jobs in Hawaii, including preserving pilot, flight attendant, and maintenance bases in Honolulu. The combined company will maintain a strong operational presence with local leadership and a regional headquarters in Hawaii. This move is expected to provide more opportunities for career advancement, competitive pay, and benefits for employees.

Sustainable Future and Financial Rationale

Alaska Airlines is committed to building upon both airlines' strong commitments to environmental stewardship. The merger is expected to generate high single-digit earnings accretion for Alaska Airlines within the first two years post-close and mid-teens Return on Invested Capital (ROIC) by year three, excluding integration costs.

Closing Conditions and Future Outlook

The transaction agreement has been approved by both boards and is conditioned on required regulatory approvals and approval by Hawaiian Holdings, Inc. shareholders. The acquisition is expected to close in 12-18 months, with the combined organization based in Seattle under the leadership of Alaska Airlines CEO Ben Minicucci.

This acquisition marks a significant milestone in the aviation industry, promising to enhance the travel experience for passengers and create a more robust platform for growth and competition in the U.S. and globally.