Alaska Airlines takes over Hawaiian Airlines: Expectations and Challenges

Alaska Airlines CEO Ben Minicucci has ambitious plans. Thanks to the recent acquisition of Hawaiian Airlines, Alaska Airlines is gaining capacity and opportunities, particularly on international routes. With the acquisition completed on Wednesday, Alaska gains access to more airports, aircraft, and customers. This marks the first major merger in the aviation sector since Alaska's acquisition of Virgin America in 2016. This expansion could speed up Alaska’s growth, including integrating larger long-haul aircraft into its fleet, particularly from Seattle. Aviation mergers are notoriously complex and have often led to financial and operational difficulties in the past. The merger of United Airlines and Continental Airlines in 2010 caused years of problems, frustrating both passengers and employees. Both the strong industry consolidation and economic concerns raise questions about the long-term success prospects of Alaska’s current venture. Analysts remain skeptical, including Savanthi Syth of Raymond James, who warned last month of medium- to long-term risks and the challenges of the integration phase. Minicucci is aware of the hurdles, particularly regulatory approval, seamlessly merging reservation systems, and managing Hawaiian Airlines’ brand under Alaska’s leadership. The acquisition could be one of the last major airline mergers for some time, as regulatory authorities have become more hesitant towards large deals. Recently, a court blocked the acquisition of Spirit Airlines by JetBlue Airways. The Alaska-Hawaiian merger faced no opposition from the Justice Department and recently received approval from the Department of Transportation. Both airlines will operate independently until they receive a joint operating certificate, which can take over a year. Through the acquisition, Alaska also gains new skilled personnel and aircraft, both of which are currently hard to come by. Supply chain issues and high demand often delay the delivery of new aircraft until the end of the decade. Alaska, previously a purely Boeing fleet, could now also use Airbus models from Hawaiian to serve longer routes. A mixed fleet could hedge against potential manufacturing problems. Minicucci also expressed satisfaction with Boeing's recent quality improvements, especially after an incident in January involving a 737 Max 9 aircraft. Boeing has made significant efforts to improve its production and quality systems, according to Minicucci. He praised the reliability of the eleven new aircraft Alaska received from Boeing this year and expressed confidence in Boeing’s new CEO Kelly Ortberg.