Alaska Airlines Set to Finalize $1.9 Billion Merger with Hawaiian Airlines
Alaska Airlines anticipates concluding its $1.9 billion merger with Hawaiian Airlines as early as Wednesday, following approval from the Department of Transportation (DOT), announced the company on Tuesday.
The merger secured DOT approval after both airlines committed to several consumer protection measures. Last month, the Department of Justice had already granted its quiet approval for the transaction.
This merger is significant for cargo operations, as Alaska Airlines will take on cargo services for e-commerce giant Amazon. Currently, Hawaiian Airlines operates a small fleet of Airbus A330 converted freighters for Amazon’s air logistics and plans to have ten cargo aircraft by next year.
It remains unclear if the existing transportation services agreement between Amazon and Hawaiian Airlines will need adjustments. Hawaiian launched its first freighter last October, and Amazon has options to acquire a 15% equity stake in Hawaiian Airlines after nine years, dependent on meeting a spending requirement of $1.8 billion.
Alaska Airlines has operated a modest fleet of cargo planes, primarily servicing routes between Alaska and Seattle, using five converted freighters comprised of three Boeing 737-700s and two 737-800s. Officials previously indicated expectations of cost savings through the integration of cargo operations, transitioning from passenger belly transport.
In the U.S. airline industry, Alaska is the fifth-largest airline, while Hawaiian ranks tenth. This merger will reinforce Alaska’s competitive standing against major U.S. carriers such as American, Delta, United, and Southwest Airlines.
Moving forward, Alaska Airlines will seek a single operating certificate from the Federal Aviation Administration (FAA) while continuing to operate under separate brands. Until that certification is received, Alaska and Hawaiian Airlines will function as one organization with distinct operations and certifications.
As the merger finalizes, Peter Ingram will step down as CEO of Hawaiian Airlines, with Joe Sprague, Alaska Airlines’ regional president for Hawai‘i/Pacific, assuming the role. He will oversee Hawaiian’s operations until the FAA’s approval is secured. Additionally, several senior executives from Hawaiian Airlines were appointed to lead an interim management team in Honolulu.
The merger will allow Alaska Airlines to potentially utilize some of Hawaiian’s long-range Boeing 787s and Airbus A330s for routes from Seattle to Asia and Europe. A primary driver for this merger is the competitive challenge posed by Southwest Airlines, which began servicing Hawaii in 2019 and impacted market share for both airlines.
Conditions set by the DOT for the merger include safeguarding the integrity of rewards programs, maintaining current service levels on key Hawaiian routes to the continental U.S. and inter-island, preserving rural services, ensuring competitive access at Honolulu’s hub, and reducing costs for military families. By establishing these protections at the outset, the DOT aims to take a more proactive approach to merger reviews, prioritizing public interest.
