Alaska Air Group (ALK) is buying Hawaiian Airlines (HA) for $1.9 billion U.S. amid growing consolidation in the aviation industry.
Alaska Air has agreed to pay $18 U.S. a share in cash and take on $900 million U.S. of debt for Hawaiian Airlines.
The combined companies will be able to offer more destinations for travellers and expand choice in the Pacific region, said the companies in a joint news release.
Alaska Air added that the Hawaiian Airlines’ brand will be preserved after the deal is completed, though the headquarters will be in Seattle and the combined company led by Alaska chief executive officer (CEO) Ben Minicucci.
Together, Alaska Air and Hawaiian Airlines will offer service to 138 destinations, including non-stop service to destinations in the Americas, Asia, and the South Pacific.
The merger of Alaska and Hawaiian comes as JetBlue Airways (JBLU) and Spirit Airlines (SAVE) plan to combine in a $3.8 billion U.S. merger.
Alaska Air and Hawaiian Airlines forecast $235 million U.S. of increased value once the merger is completed and expect additional earnings in the high single digits within the first two years.
The boards of directors at each airline have already approved the deal. Hawaiian Airlines shareholders are expected to vote on it in the first quarter of 2024 with closing expected in the next 18 months.
Prior to today (Dec. 4), the stock of Alaska Air had declined 6% on the year to trade at $39.73 U.S. per share. The stock was down 12% in premarket trading on news of the merger.
Hawaiian Airlines’ stock is up 189% in premarket trading on news of the deal. Before today, its stock had been down 50% on the year and trading at $4.86 U.S. per share.
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