Alaska Airlines is buying Hawaiian Airlines for $1.9 billion. The two companies announced their plans for merger on Sunday at an event in Honolulu.
The combined company will be headquartered within Seattle under the direction by Alaska Airlines CEO Ben Minicucci.
“As the two airlines have their roots in the 50th and 49th states and both specifically dependent on flights, Alaskan and Hawaiians share many similarities,” Minicucci said.
In the press conference, he praised the friendship between the late Hawaii as well as Alaska Senators Daniel Inouye and Ted Stevens and also the bonds of political friendship between the indigenous Hawaiian in addition to Alaska Native organizations. He also said that the airlines have the same corporate culture.
“We are united in how we conduct business and the way we take care of our employees, and our commitment and support to our communities,” he said.
Hawaiian Airlines serves about half the traffic between islands in the state. Peter Ingram, Hawaiian Airlines the president and CEO of Hawaiian Airlines Ingram says Honolulu is set to become the first Alaska Airlines hub.
“This is the most significant announcement for Hawaiian in its history, and that’s quite a bit for a 94-year-old firm,” Ingram said. “Our commonalities in our culture, our people and our values are deep which is what will guarantee the future of the two brands.”
The CEOs of both companies declare it will take between 12 and 18 months until customers are aware of any changes. With schedules frequent flyer and airline names remaining the same. Minicucci says that the Hawaiian name will remain after the merger is completed.
“The Hawaiian Airlines brand will remain, not just in the name, but also in the distinctive logo that is displayed on Hawaiian aircrafts, in airports, and at other places, and in the service that is enjoyed by Hawaiian Airlines customers employees, partners as well as the communities they serve,” he said.
It’s uncommon in the aviation industry for a company that is bought to maintain its brand name and logo, as per Hawaii News Now business reporter Howard Dicus.
“It’s practically unheard of” Dicus said.
Dicus said the promise was to a tail design that was combined when United Airlines merged with Continental in the year 2010.
“This will be more than just a compromise. This is an acknowledgement of the Hawaiian brand name is valuable,” he said.
In the deal, Alaska will acquire 1 billion of equity and $900 million of debt from Hawaiian Airlines. Minicucci told the AP that discussions about pricing began in the beginning of this year. The price is $18 per share. That is four times the amount Hawaiian Airlines had been trading at, which was just $4 per share.
“Today we’ve reached a settlement since we came to the right price and valued the company in a good position,” Minicucci said. “And the airline shares have been extremely volatile and therefore we decided to ask. “What is the actual value of the company worth?’ The price we suggested was reasonable.”
Alaska has a bigger workforce that includes around 23,000 workers as opposed to Hawaii’s 7700. Ingram stated that job protection was an integral part of the agreement.
“It was vital for Hawaiian Hawaiian to make sure that Alaska will be able to sustain and expand union-based jobs in Hawaii as well as maintain flights crew bases along with operations in Hawaii and in addition to Honolulu becoming a hub of strategic importance for the company’s combined operations,” Ingram said.
Alaska owns 300 airplanes currently which are mostly Boeing 737s. The airline is expected to receive 60 additional aircraft from Hawaiian Many of which are wide-body jets that can be used for international flights.
