Hawaiian agrees to be bought by Alaska Airlines in $1.9B deal

Dec. 4—Peter Ingram, Hawaiian Airlines' president and CEO, and Alaska Airlines CEO Ben Minicucci said the new company will maintain and burnish the separate brands of both airlines.

Hawaiian Airlines, a kamaaina company that has served the islands for 94 years, has agreed to be bought by Alaska Airlines in a $1.9 billion deal that has raised questions and concerns for customers, workers and local leaders.

Most of Hawaiian Airlines' nearly 7, 300 employees would keep their jobs if the sale is approved by shareholders and federal regulators, executives assured in announcing the blockbuster deal Sunday.

Peter Ingram, Hawaiian Airlines' president and CEO, and Alaska Airlines CEO Ben Minicucci told the Honolulu Star-Advertiser in an interview that the new company will maintain and burnish the brands of Alaska and Hawaiian airlines.

Respecting the culture, reputation and community of the iconic air carrier that was founded by veteran Navy pilot Stanley Carmichael Kennedy Sr. on Nov. 11, 1929, is at the heart of the deal, executives said.

Alaska Air Group Inc. will pay $18 a share for Hawaiian Holdings Inc., the parent of Hawaiian Airlines. Hawaiian's stock closed at $4.86 a share Friday.

The deal includes $900 million in Hawaiian debt, which airline executives say raises the total value of the deal to $1.9 billion. The transaction was approved Saturday by both air carriers' boards of directors.

Ingram acknowledged the angst that the surprise Sunday morning sale announcement created.

While the approval processes play out over the next 12 to 18 months, Hawaiian and Alaska "remain competitors, " Ingram said, and no workforce reductions are planned.

Existing reservations and new ones made with each airline before the deal officially closes will be honored. Alaska and Hawaiian's loyalty program rules and policies remain independent. Both before and after the airlines combine, existing miles will be honored. After closing, the two airlines' loyalty programs will integrate into a shared loyalty program.

"Nothing changes in terms of how we operate our business on the Hawaiian side. We don't have any plans for reductions in activities during that period of time, " said Ingram.

Minicucci said Alaska Airlines will not cut Hawaiian Airlines' union workforce.

"No union jobs are going away ... with this combination. Honolulu becomes our second-largest hub in the Alaska system, behind Seattle. We'll need many nonunion jobs, " said Minicucci, who said exact staffing numbers won't be available until the deal is finalized. "We will need a significant portion of the people who already work here going forward."

Ingram said the commitment to keep about 5, 800 union jobs and trying to find a place for the 1, 400 nonunion workers were "very important " to Hawaiian Airlines' leadership team while negotiating the deal.

"We're very concerned about the potential impacts to employment, and one thing that gives us comfort going forward is that this creates a platform for growth in the long term, " said Ingram, who emphasized that "none of those decisions have been made yet."

Minicucci said the combined company that he will run as CEO will "keep the brands separate."

"This is a big, unique decision. It just makes a lot of sense. Hawaiian has been in business for 94 years ; they are admired and respected here ... they built a strong legacy ... they have massive loyalty here, " he said. "We have a beloved brand in the Pacific Northwest and strong loyalty, so when we thought of the combination going forward ... this cannot be one brand.

"This has to be a dual-brand strategy to ensure a successful integration with employees, customers and communities. We really need the majority of the people already employed today at Hawaiian."

Ingram said he believes keeping the Hawaiian brand alive will "resonate " with employees.

"This is huge news for the 7, 300 people who work for Hawaiian Airlines, and today is going to be a difficult day ... a lot of emotion and people anxious about what the future entails as the news comes out."

The fact that the Hawaiian Airlines brand is absolutely going to continue "really shows the respect that the Alaska team has for what our group has built over the last 94 years, " said Ingram, who said the deal is "pro-consumer " and "pro-competition " and that regulators will reach the same conclusion.

Ingram said he has not made a decision about his future with the company. His focus is seeing the agreement through the approval and regulatory process.

Alaska Airlines and its regional partners serve over 120 destinations across the United States, Belize, Canada, Costa Rica and Mexico with new service to the Bahamas and Guatemala beginning in December.

Hawaiian Airlines is in its 95th year and is the state's largest carrier, with about 150 daily interisland flights and nonstop flights between Hawaii and 15 U.S. gateway cities, and service to American Samoa, Australia, Cook Islands, Japan, New Zealand, South Korea and Tahiti.

The airlines said in the announcement that the merger will :—Expand the fifth-largest U.S. airline to a fleet of 365 narrow-and wide-body airplanes.—Make Honolulu a key hub for the combined airline with expanded service for residents of Hawaii to the mainland and creating new connections to Asia and the Pacific for travelers across the U.S.—Maintain a commitment to Hawaii, including "robust " neighbor island service.—Maintain and grow a union-represented workforce in Hawaii.

LOCAL LEADERS CAUTIOUS Reaction to Sunday's news of a deal to sell one of Hawaii's oldest and largest employers to a mainland corporation was met with cautious optimism by elected officials.

The culture of Hawaiian Airlines, what it means to workers and the local communities it serves, must be preserved with the jobs Hawaii's economy depends on, leaders agreed.

"The Attorney General and I will be monitoring the merger /acquisition very closely, " Gov. Josh Green told the Star-Advertiser in a statement. "Both Alaska Airlines and Hawaiian Airlines are very high-quality companies, but ultimately, I will be watching to make sure all of our state's needs are met and all of our workers are cared for."

U.S. Rep. Ed Case, in a statement, said some of his "earliest memories include flying with my dad on Hawaiian Airlines from Hilo to the Big City."

"So, like all of us it is difficult to accept that this truly kamaaina company, such a deep part of the lives of generations of residents and visitors, may not continue as an independent and uniquely Hawaiian enterprise. But if this is going to and needs to happen to maintain Hawaiian's contributions to our state, Alaska Airlines is a promising partner, " Case said.

"Its undertakings to continue the Hawaiian brand, employ the over 7, 000 Hawaii ohana that have served us so well, and sustain reliable, affordable and competitive inter-island and Hawaii-outside world serv ­ice are very welcome."

Case said what really matters are "full, binding and transparent commitments to back up those words."

Kauai Mayor Derek Kawakami said the local air carrier is a "cornerstone of Hawaii's modern history " and one of a few companies that successfully transitioned through different eras while maintaining core values "that reflect our way of life."

"It's much more than an airline, it's our people. Our ohana, " Kawakami said in a statement. "Alaska Airlines has a solid reputation in our community, and we are hopeful that this will be a friendly combination of both companies. While it is our understanding that Hawaiian employees will be retained, we recognize that change is not easy. We look forward to collaborating with the Alaska /Hawaiian Airlines leadership as we work together to minimize impacts and enhance service and experience for all."

U.S. Rep. Jill Tokuda, whose 2nd Congressional District includes the neighbor islands, told the Star-Advertiser that the longtime local company is a "lifeline to loved ones " that has "opened doors for education and business " while keeping the islands connected.

"Change is never easy, and sadly, this is not the first time we have seen a local company acquired by a mainland firm. Going forward, it is important that two things are prioritized in the transition : maintaining and expanding affordable interisland transportation for kamaaina and preserving local jobs for local people, " said Tokuda. "It is my sincerest hope that they will be able to apply solutions and technology they've used in Alaska to help us expand affordable and stable air transportation coverage throughout our islands, especially Molokai and Lanai."

Speaking during a news conference Sunday afternoon, Minicucci said he's heard about the unique challenges carriers have had serving those two destinations. He promised to get to up to speed and dig into the issue, which is a priority for the business.

The Association of Flight Attendants-CWA, AFL-CIO, which represents more than 6, 800 flight attendants at Alaska Airlines and 2, 200 more at Hawaiian Airlines, said in a statement that the union's first priority is to determine whether the "merger will improve conditions for flight attendants just like the benefits the companies have described for shareholders and consumers."

"Our support of the merger will depend on this. As a practical matter, our union Constitution and Bylaws provides a detailed process for this review with AFA leadership from each airline, " read the statement. "Mergers take time—this will not happen overnight. Our union will continue to press forward in negotiations at Alaska Airlines. Alaska flight attendants, joined by Hawaiian flight attendants, will be on the picket line Dec. 19 as holiday travel takes off."

AIRLINE MERGER AT A GLANCE—Deal : Alaska Airlines is buying Hawaiian Airlines for $1.9 billion, including $900 million in Hawaiian debt.—Employees : The companies' CEOs say all union employees will be retained, but they did not make the same guarantee for nonunion employees.—Wall Street : Purchase price is $18 a share for Hawaiian Holdings Inc., parent of Hawaiian Airlines. Hawaiian's shares closed at $4.86 Friday.—Brands : Both the Alaska and Hawaiian airlines names will be retained.—New airline : Alaska, the nation's fifth-largest airline, will grow to a fleet of 365 airplanes serving 138 destinations. Based in Seattle, the combined company will be led by Alaska Airlines CEO Ben Minicucci.—Next steps : The deal is subject to regulatory and shareholder approvals. It is expected to close in 12 to 18 months.