Alaska and Hawaiian Airlines Merge: A ‘Win-Win’ for Investors and Customers

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A Strategic Merger in the Airlines Industry:

Alaska Airlines and Hawaiian Airlines have announced a strategic merger in a $1.9 billion all-cash deal. This move is expected to strengthen their position in the Western US market, particularly in Hawaii, where the combined entity will become the clear market leader.

Benefits for Investors and Customers:

The merger is expected to be EPS accretive for Alaska in the first two years after closing. Additionally, it promises to offer greater choice and convenience for customers with a combined network of 138 destinations served by 365 jets.

Maintaining Brand Identity:

Unlike the Alaska-Virgin Airlines merger, where Virgin’s brand disappeared, Hawaiian Airlines will retain its separate identity post-merger. This decision capitalizes on Hawaiian’s strong brand recognition and popularity in the islands.

Regulatory Approval Expected:

The relatively small size of the combined airline and the minimal network overlap are expected to facilitate a smooth regulatory approval process. Additionally, the merger is positioned as “pro-consumer” and “pro-competitive,” offering consumers more options and challenging the dominance of larger airlines.

Limited Impact on Industry Landscape:

With a combined ASM of 20.6 billion, the Alaska-Hawaiian entity remains considerably smaller than industry giants like United, American, Delta, and Southwest. This further strengthens the argument that the merger will not significantly impact the overall industry landscape.

Conclusion:

The Alaska-Hawaiian Airlines merger presents a strategic opportunity for both companies to strengthen their position in the Western US market and enhance their value proposition for investors and customers. The minimal network overlap and focus on maintaining Hawaiian’s brand identity are likely to facilitate regulatory approval and contribute to the success of this strategic partnership.

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