Alaska Airlines said on Sunday that it has reached an agreement to acquire Hawaiian Airlines for $1.9 billion, including debt, positioning the airline for possible conflict with the Biden administration, which has expressed apprehension over increased sector rates.

The 49th and 50th states in the union would retain their own airline brands. Alaska will purchase Hawaiian shares for $18 in cash per share. Hawaiian's stock ended at $4.86 on Friday, having lost slightly more than half of its value this year.

(Photo : by Justin Sullivan/Getty Images)
Alaska Airlines said on Sunday that it has reached an agreement to acquire Hawaiian Airlines for $1.9 billion, including debt, positioning the airline for possible conflict with the Biden administration, which has expressed apprehension over increased sector rates.

Hawaiian debt worth $900 million is also included in the purchase; according to the airlines, this raises the acquisition's overall value to $1.9 billion. Ben Minicucci, the CEO of Alaska Airlines, will lead the united airline, which would have its headquarters in Seattle. Within two years of the transaction completing, the firms predict that the purchase will increase earnings. American Airlines, British Airways, and Cathay Pacific are members of the oneworld Alliance, which the amalgamated carrier would join.

Despite being smaller than the country's leading airlines, Alaska and Hawaiian claimed that combining their networks would create a more seamless connection to 138 destinations for travelers passing through the continental United States and the Pacific, including 29 international locations in the Americas, Asia, Australia, and the South Pacific.

The companies affirmed their commitment to retaining Honolulu as a crucial hub and expressed their dedication to preserving and expanding the union-represented workforce in Hawaii.

Additionally, they highlighted that the merger would significantly increase the number of destinations accessible within one stop in North America for travelers originating from Hawaii. Commenting on the partnership, Minicucci conveyed deep respect for Hawaiian Airlines, acknowledging its role as a prominent employer in Hawaii and recognizing how the brand and its people embody the warm culture of aloha worldwide.

Although the boards of both firms have given their approval, Hawaiian Holdings' shareholders still need to provide their approval. It will also require approval from US authorities, which have opposed further airline consolidation due to concerns that it would result in higher ticket prices.

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Changing Dynamics in the Airline Industry

There may be less rivalry between Hawaiian and Alaskan, two of the top airlines operating between Hawaii and the US mainland.

As the largest low-cost airline in the country, JetBlue's planned $3.8 billion acquisition of Spirit Airlines is already being opposed by the Biden administration. Additionally, the Justice Department prevailed in a lawsuit that ended JetBlue and American Airlines' cooperation.

In the spring, the average domestic airfare from Seattle was $409.93. That was an increase from $293.08 two years prior, based on U.S. data. The Transportation Department. In the spring of 2016, the average domestic airline ticket out of Honolulu was $367.94, compared to $329.93 in the previous two years.

The businesses from Hawaii and Alaska anticipate that the agreement will conclude in 12 to 18 months. The item has been updated to reflect that the deal has already received board approval.

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