Alaska Air to buy Hawaiian Airlines in a $1.9 billion deal with debt

SEATTLE (AP) — Alaska Airlines said Sunday it agreed to buy Hawaiian Airlines in a $1.9 billion deal, including debt, putting it on track for a potential clash with a Biden administration wary of higher fares in the industry.

The combined company would keep both airlines’ brands, rooted in the nation’s 49th and 50th states. Alaska will pay $18 in cash for each share of Hawaiian, whose stock closed Friday at $4.86 after losing just over half its value in the year so far.

The deal also includes $900 million in Hawaiian debt, which the airlines said brings the acquisition’s total value to $1.9 billion.

The combined airline would be based in Seattle, with Alaska Airlines CEO Ben Minicucci at its head. It will participate in the oneworld Alliance, which includes American Airlines, British Airways and Cathay Pacific. It would also combine two networks to offer more connectivity to 138 destinations for passengers traveling through the continental United States and across the Pacific, including nonstop service to 29 international destinations in the Americas, Asia, Australia and the South Pacific.

The companies said they would also keep Honolulu as a key hub and that they’re “committed to maintaining and growing union-represented workforce” in Hawaii. They also said the combination would triple the destinations that can be reached within one stop in North America for travelers via Hawaii.

The deal has been approved by the boards of both companies, but it still needs an OK from the shareholders of Hawaiian Holdings. It will also need the blessing of U.S. regulators, which have shown resistance to more consolidation within the airline industry out of fear it could lead to higher fares.

The Biden administration is already trying to block JetBlue’s proposed $3.8 billion acquisition of Sprit Airlines, which would subsume the nation’s biggest budget carrier. The Justice Department has already won a lawsuit that killed a partnership between JetBlue and American Airlines.

The average domestic airline fare out of Seattle during the spring was $409.93. That was up from $293.08 two years earlier, according to data from the U.S. Department of Transportation.

The average domestic airline fare out of Honolulu during the spring was $367.94. That was up from $329.93 two years earlier, according to data from the U.S. Department of Transportation.

The Alaska and Hawaii companies expect the deal to close in 12 to 18 months. ___

This story has been corrected to show that the company boards have already approved the deal.