Alaska Airlines has agreed to acquire its rival Hawaiian Airlines in a deal valued at about $1.9 billion.
The airlines said they would keep their respective brands, and the new carrier would be based in Seattle, where Alaska is headquartered.
Alaska Airlines will acquire Honolulu-headquartered Hawaiian Airlines in a deal that in part aims to boost the cargo businesses of both airlines.
Alaska Air Group and Hawaiian Holdings have entered into a definitive agreement for the acquisition. Both brands will remain separate.
The deal is for $18.00 per share in cash and has a transaction value of approximately $1.9bn, said Alaska Airlines in a press release.
The combined company aims to expand the choice of passenger and cargo service options and access throughout the Pacific region, continental US, and globally.
“The combination of complementary domestic, international, and cargo networks is positioned to enhance competition and expand choice for consumers on the West Coast and throughout the Hawaiian Islands,” said Alaska Airlines.
The company further noted: “For Hawaii residents, the combination will expand service and convenience by tripling the number of destinations throughout North America that can be reached nonstop or one stop from the Islands, while maintaining robust Neighbor Island service and increasing air cargo capacity.”
Alaska added that the combined company will continue to invest in cargo in Hawaii.
Seattle will remain the headquarters for Alaska, but Honolulu will become a key hub for the combined business.
The combined cargo businesses are expected to have annual earnings before interest tax, depreciation and amortisation contribution of $20m, according to an Alaska Airlines investor presentation.
For Alaska Airlines, cargo and “other” business makes up 3% of revenue. For Hawaiian, 7% of revenue is from cargo and “other” business.
In October, Hawaiian Airlines commenced service of its A330-300P2F (passenger to freighter) contract business for e-commerce giant Amazon.
The airline received the first of 10 converted freighters that it will operate for Amazon Air in July
The airline plans to introduce the 10 aircraft over the next 1.5 years.
Alaska Air Cargo currently has three 737-700Fs and one 737-800BCF (Boeing Converted Freighter) in its fleet. The airline will add another second 737-800BCF “early next year”.
