Alaska Airlines Buys Hawaiian Air in Bid to Survive

As travel recovers, these two are forming a new Pacific Empire

BREAKING NEWS

Alaska Airlines has announced a deal to acquire Hawaiian Airlines at a massive premium—$18 share. This story is wild, let’s break it down. 

WHAT HAPPENED

Both of these airlines have been struggling thanks to higher fuel prices and a slow travel recovery at the beginning of the year, but Hawaiian has been getting hammered as their costs simply could not go down. However, Alaska Airlines is buying the company at an incredible 290% premium and taking on nearly $1 billion in debt from Hawaiian to get this across the finish line. Meanwhile, both brands would remain independent while Honolulu would become a new hub for Alaska Airlines. This is all about consolidating resources so these two niche airlines can stand up to encroachment from the likes of Delta and Asian rivals. 

RING OF PROFITS

With China’s reopening sparking a massive travel boom, Pacific territory is becoming incredibly valuable for the air industry. International travel between the Americas (both of them) and Asia has been a key pillar for bringing leaders like Delta back to prominence. Smaller airlines like Alaska and Hawaiian are getting priced out of that boom due to simply being too small and specialized. By combining forces, both airlines stand a better chance of competing their way through this. But for now, the market is punishing Alaska Airlines pretty harshly. 

WHY IT MATTERS

The last time Hawaiian Airlines traded at $18/share was December of 2021. The brand has suffered from years of structural decline and analysts are widely panning Alaska for massively overpaying here. This feels like an emotional deal that got out of hand at the finish line and now Alaska Airlines stock is paying the price. While there’s a lot of negative pressure on these two companies for the short term, they still have the opportunity to get that value back through cost-savings and synergies. More importantly, a larger airline here can stand up to competitive pressures on both sides of the Pacific. For now, Alaska Airlines stock fell nearly 20% in the first minutes after trading opened on Monday. Hawaiin Airlines surged, but their stock was down 64% on the year before all this.