Alaska Airlines Buyout Plan May Raise Antitrust Issues

Alaska Airlines announced on December 3 that it had reached a deal to purchase Hawaiian Airlines for $1.9 billion, potentially putting the airlines on a collision course with federal regulators wary of high airfares, the Associated Press reported.

According to the plan, both airlines would maintain their brands while Alaska Airlines would pay $18 for each share of Hawaiian Airlines.

Officials from both airlines said the deal would combine two carriers with few overlapping routes, creating a stronger company better positioned to compete with the country’s top four airlines, American, Delta, Southwest, and United.

Alaska Airlines CEO Ben Minicucci told investors in a conference call last Sunday that the combined airlines would create a “clear leader” in the $8 billion Hawaiian market.

The purchase includes $900 million in Hawaiian Airlines debt, bringing the total value of the acquisition to $1.9 billion. The combined company would retain Minicucci as its head and be headquartered in Seattle.

The two companies forecast that the combined airline would increase profits within two years of closing the deal, which is expected within 12 to 18 months.

The joint Alaska/Hawaiian airline would be included in the oneworld Alliance, which includes American, Cathay Pacific, and British Airways.

The boards of both Alaska and Hawaiian have approved the deal, however, it will still need to be approved by the shareholders of Hawaiian Holdings. Additionally, the acquisition will also require the approval of US regulators, which under the Biden administration, have resisted airline consolidation out of concern that it would lead to higher airfares.

Currently, the Biden administration is trying to block a proposed $3.8 billion acquisition for JetBlue to buy Spirit Airlines.

Earlier this year, the Justice Department won its lawsuit blocking a partnership between JetBlue and American Airlines after a federal judge ruled that the airlines must rescind their Northwest Alliance agreement.