I’ve listened to a couple of calls by the airlines on the merger announcement, and my best guess at this point is that they have no idea how they’ll handle this just yet. Will this be divided by fleet type? Will it be by network? Will the physical onboard product be the same across the fleet or will it vary? There are so many ways to skin this cat. It’s a gesture, yes, but it’s a meaningful one.

Keeping the Hawaiian brand in Hawaiʻi will help from the beginning to show that Alaska takes its responsibility there seriously. They also love their airlines, or at the very least they rely on them. Yes, the people of Alaska hate Alaska and the people of Hawaiʻi hate Hawaiian, but it’s THEIR airline to hate.

Alaska knows this from how it operates in Alaska, so it fully understands what this means to the people of Hawaiʻi. When you are an airline that represents a place thatʻs hugely dependent upon air travel as a lifeline, you take on a completely different standing. What this shows is that Alaska understands something very unique that only it and Hawaiian share in the US. This is more complicated, but Alaska clearly thinks it’s worth it. That, however, was easier because the networks of the two airlines didn’t touch. The only thing I can think of like this is when Southern Airways Express bought Mokulele and kept the Mokulele brand flying in Hawaiʻi. We’ve seen separate brands with international groups like Air France-KLM, but those are also separate airlines and operating certificates across international borders. Presumably a current Alaska pilot could end up flying you from Honolulu to Līhuʻe while a current Hawaiian pilot could get you from Anchorage to Kotzebue. There will be one operating certificate, and all employees in each workgroup will be integrated into a single workgroup. To be clear, this will be a single airline behind the scenes. Whatʻs probably the most unique thing about this whole deal is that both the Alaska and Hawaiian brands will survive. A Double Brand Strategy to Fit a Unique Market Hawaiianʻs stock has been so depressed that it created a real opportunity for both airlines to notch a win. That may be a notable premium over what Hawaiian was trading for, but if Alaska had made that bid two years ago it would have been laughed at for offering something less than the share price at that time. Alaska included these two slides in its investor presentation.Īlaska has the cash available, so it can make this happen with minimal impact to the balance sheet. So why is Alaska willing to pay this? Itʻs really not all that much in the scheme of things. So, for Hawaiian to find a sugar daddy that will buy the airline at a level the stock hasnʻt seen for over a year has to be a welcome lifeline, if not a bittersweet one. On top of this, Hawaiian is getting ready to induct a brand new fleet, the Boeing 787-9, which will add complexity and accelerate growth at the airline during a time when growth doesnʻt really make sense. The airline has debt piling up, and it is running out of cushion. The twin recent hit of Pratt & Whitney engine issues grounding chunks of the A321neo fleet along with the fires in Lāhainā decimating demand have just continued the streak of pain. Then, COVID was horribly painful even compared to other airlines thanks to the airline’s geographic footprint. It started when Southwest entered Hawaiʻi in March 2019. (Ok, that’s not true… wishful thinking.)įrom a Hawaiian perspective, this is likely the best possible outcome coming out of a very difficult time for the airline.

Alaska has agreed to sign a 100-year deal to keep POG juice on all Hawaiian-branded flights.

The Hawaiian brand will live on in tandem with the Alaska brand, but everything under the hood will be a single operating airline.

Alaska will be the surviving entity with headquarters remaining in Seattle.

That means Alaska will pony up about $1.9 billion in total for Hawaiian, including the $900 million in net debt it will take on.

Alaska will pay $18 a share - or about $1 billion - which is about 4x what Hawaiian was trading for before the deal was announced.

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