Historic Merger: Alaska Airlines and Hawaiian Airlines Join Forces

A significant development is on the horizon in the aviation industry: The merger between Alaska Airlines and Hawaiian Airlines has overcome its final regulatory hurdle. This consolidation marks the first major alliance of American airlines since 2016, when Alaska Airlines received approval to merge with Virgin America. The U.S. Department of Transportation announced on Tuesday that it has approved the joint application of the two airlines for a common operating certificate for international routes. This approval allows the parent company Alaska Air Group to officially acquire Hawaiian Airlines once the $1.9 billion transaction is completed. Peter Ingram, the current President and CEO of Hawaiian Airlines, will step down from his position once the merger is finalized. Joe Sprague, currently the Regional Director for Hawaii and the Pacific at Alaska Airlines, will take his place. Sprague will lead the interim management team of Hawaiian Airlines until the Federal Aviation Administration (FAA) issues the final operating certificate, which could take 12 to 18 months. During this period, both airlines will operate as one entity but under separate operating certificates. Shareholders of Hawaiian Airlines, who approved the merger in February, will receive $18 per share in cash as part of the deal, which includes $900 million in debt from Hawaiian Airlines. Joe Sprague highlighted in a statement the historic opportunity to unite two companies with over 90 years of experience serving local communities. The merger follows a period of sustained losses for Hawaiian Airlines. The company reported a net loss of $67.6 million in the second quarter, a significant increase compared to a loss of $12.3 million in the previous year. With a history dating back to 1929, Hawaiian Airlines is the largest air carrier in the state of Hawaii, offering around 150 inter-island flights daily. Alaska Airlines, on the other hand, serves over 120 destinations in the U.S. and internationally with its regional partners. Both airlines emphasize that the merger will create an expanded range of travel destinations for consumers while securing jobs in the long term. It remains to be seen how the merger will impact the approximately 7,400 employees of Hawaiian Airlines, particularly the 1,400 non-unionized employees. Despite a lawsuit filed in April citing potential negative impacts of the merger, the court eventually approved it. The U.S. Department of Transportation also underscores the public interest safeguards implemented to protect travelers and competition. Aviation historians view the proactive and specific review approach of the Biden administration as a new method in evaluating mergers. The approval of this merger could serve as a future reference for airline mergers to ensure the protection of travelers and competition.