Alaska Air Group to buy Hawaiian Airlines in $1.9B deal

SEATTLE -- Alaska Air (ALK) on Sunday announced it will buy rival Hawaiian Airlines (HA) for $1.9 billion.

The acquisition was the culmination of "several months" of negotiations, according to Alaska Airlines CEO Ben Minicucci. It will include $900 million in Hawaiian Airlines debt.

"This is a fantastic deal that bring two airlines that have amazing loyalties in our regions together," said Minicucci in a news conference, adding that the merger will give customers in both states expanded domestic and international choices.

The deal, which is forecast to take between nine and 18 months, will see both companies keep their brands, a unique decision Minicucci and Hawaiian Airlines CEO and President Peter Ingram say was made out of respect for the nearly 100-year legacy of the two airlines and the communities they serve.

Both states are "uniquely reliant upon air travel," Alaska Airlines said in a news release Sunday. The airline currently serves 19 cities, many of which are not connected by roads.

The merger will also shape Honolulu into the company's second-largest hub, "enabling greater international connectivity for West Coast travelers throughout the Asia-Pacific region with one-stop service through Hawaii," according to the news release.

Alaska Airlines' fleet will expand from about 300 to 365 planes, and serve a total of 138 destinations, including "non-stop service to 29 top international destinations in the Americas, Asia, Australia and the South Pacific," the company said in the release.

Given Alaska's membership in the Oneworld international airline alliance, Hawaiian Airlines loyalty customers will have access to improved benefits such as lounge access, an enhanced credit card loyalty program and the ability to earn and redeem more miles.

"In Alaska Airlines, we are joining an airline that has long served Hawaii, and has a complementary network and a shared culture of service," said Ingram. "With the additional scale and resources that this transaction with Alaska Airlines brings, we will be able to accelerate investments in our guest experience and technology, while maintaining the Hawaiian Airlines brand."

Minicucci, who will become the CEO of both airlines, heralded the move as "pro-consumer" and would allow for the nation's fifth-largest airline to compete more robustly with United, Delta, Southwest and American Airlines, which currently own 80% of the domestic market share.

The deal could face scrutiny from antitrust authorities. It comes less than a month after JetBlue Airways CEO Robin Hayes testified in federal court following an antitrust lawsuit filed by the Justice Department and the attorneys general from six states and the District of Columbia over the company's proposed $3.8 billion acquisition of Spirit Airlines.

When asked about the timing of the acquisition, Minicucci told reporters, "We'll let the lawyers deal with that issue."

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