Alaska Airlines' acquisition of Hawaiian takes step forward

Alaska Airlines takes a step closer to acquisition of Hawaiian

What you probably already know: Alaska Airlines got closer this week to a deal to acquire Hawaiian Airlines after the Justice Department opted not to raise an antitrust challenge. Alaska has made an offer to buy Hawaiian for about $1 billion and has argued that, combined, the airlines will be able to connect more destinations to Hawaii and allow for increased international expansion. The deal will still require the U.S. Department of Transportation to approve it before it can proceed.

Why? The decision by the DOJ not to pursue an antitrust challenge is a major win for Alaska Airlines and comes after a federal judge blocked JetBlue’s acquisition of Spirit Airlines earlier this year. The two deals, however, were very different. JetBlue and Spirit are both low-cost airlines and the judge in his ruling made it clear that the merger would allow both airlines to raise prices and cut routes where they compete, both of which would be bad for customers.

What it means: In the Alaska-Hawaiian deal, Alaska will allow the much-smaller Hawaiian Airlines to add wide-body planes to its fleet, thus increasing the number of places the airline can reach, while also connecting Hawaiian to the One World Alliance, which includes international airlines that will be interested in increased connections on the Hawaiian islands. Alaska has said it plans to maintain Hawaiian’s brand and retain the local jobs post-acquisition. Hawaiian Airlines has been in financial trouble and reported a $138 million loss in Q1 of 2024.

What happens now? If it goes through, this will be the largest U.S. airline merger deal since Alaska acquired Virgin American in 2016 for $2.6 billion. Even after adding Hawaii, Alaska will still be the fifth largest airline in the U.S. market, which strengthens the company’s competitive position in a highly competitive landscape. In the original announcement, Alaska said it planned to close the deal by June 2025, though the DOJ has been the source of several delays, which could push back that timeline.

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