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Hawaiian Air Shares Jump 183% On News Of $1.9 Billion Acquisition

Alaska Air and Hawaiian Airlines intend to operate as independent brands. (Photo by George Rose)

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It’s just the latest tectonic shift in an airline industry always drifting toward consolidation. North America’s sixth-largest airline, Alaska Air, has reached a deal to buy struggling rival Hawaiian Airlines for $18 per share in an all-cash deal valued at $1.9 billion, including $900 million of Hawaiian’s debt.

Since the pandemic, Hawaiian has had difficulty returning to profitability, hampered by a variety of issues, including a slower-than-expected return of Japanese travelers to Hawaii and the required grounding of up to four Airbus A321neo aircraft at a time for inspection due to an issue with Pratt & Whitney geared turbofan engines. On the company’s most recent earnings call in October, Hawaiian Airlines executives said the Maui wildfires had cost the carrier approximately $25 million in lost revenue.

Shares of Hawaiian Airlines closed on Friday at $4.86, down 64% from a year ago. Following the merger announcement, shares opened on Monday at $13.73, approaching the 52-week high of $13.81.

Alaska Air, which also owns regional airline Horizon Air, intends to keep operating Hawaiian as an independent brand. “This combination is an exciting next step in our collective journey to provide a better travel experience for our guests and expand options for West Coast and Hawai’i travelers,” Alaska Air CEO Ben Minicucci said in a statement.

Of course, it remains to be seen whether this deal will ever take flight. The acquisition requires approval from regulators in a Biden administration that has flexed its antitrust chops in the airline industry. In March, the Department of Justice filed an antitrust lawsuit against budget airline JetBlue to prevent its blockbuster $3.8 billion merger with Spirit Airlines. (That trial is expected to wrap up this month.) And in May, a federal judge rejected a partnership between American Airlines and JetBlue after the government successfully argued that the alliance suppressed competition.

Still, on a Sunday evening call with analysts, Minicucci projected confidence that government would approve the Alaska-Hawaiian deal, citing the two airlines’ 12 overlapping markets and an expanded network that he said would allow for more robust competition with the “Big Four” carriers—American, United, Delta and Southwest. “We are hopeful that it will be seen in a positive light,” he said.

The transaction agreement has been approved by both airlines’ boards. Alaska Air plans to seek approval from Hawaiian’s shareholders in the first quarter of 2024. If it clears Justice Department approval, the deal is expected to close in 12-18 months, or as late as May 2025.



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