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Alaska Air Agrees to Buy Rival Hawaiian in $1.9 Billion Deal

Alaska Air Agrees to Buy Rival Hawaiian in $1.9 Billion Deal Alaska Air Group Inc. has agreed to buy rival Hawaiian Holdings Inc.'s Hawaiian Airlines in a $1.9 billion deal to combine the two carriers, challenging the Biden administration's aggressive stance on mergers that has already derailed one partnership. The deal, announced on Thursday, aims to create a stronger competitor in the U.S. airline industry. The merged entity will have a larger network, increased passenger traffic, and enhanced operational efficiencies. It will also help Alaska Air expand its reach in the lucrative leisure travel market of Hawaii. The agreement comes after Alaska Air's failed attempt to acquire Virgin America under the Obama administration. The deal was ultimately approved but faced significant scrutiny and delays due to antitrust concerns. This time, Alaska Air hopes to overcome regulatory challenges by emphasizing the benefits of increased competition and improved service for travelers. One of the main reasons for Alaska Air's interest in Hawaiian Airlines is its strong presence in Hawaii, a popular tourist destination. With this acquisition, Alaska Air aims to tap into the growing demand for travel to the islands and attract more passengers. Hawaiian Airlines currently dominates the inter-island market, and merging with Alaska Air would create a formidable force in this segment. Alaska Air plans to operate Hawaiian Airlines as a standalone subsidiary, maintaining its brand and distinctive island-inspired service. The combined entity will benefit from cost synergies, economies of scale, and a broader customer base. Additionally, Alaska Air's extensive route network in the West Coast will complement Hawaiian Airlines' strength in the Pacific. The deal comes at a time when the airline industry is recovering from the devastating impact of the COVID-19 pandemic. With travel restrictions easing and vaccination rates increasing, airlines are looking to rebound and secure their positions in the market. The Alaska Air-Hawaiian Airlines merger is a strategic move to position both carriers for long-term success and capitalize on the anticipated rebound in leisure travel. However, the deal is likely to face scrutiny from regulators, given the Biden administration's tough stance on airline mergers. The administration has expressed concerns about consolidation in the industry, as it may lead to reduced competition and higher fares for consumers. The Justice Department's recent opposition to a planned partnership between American Airlines and JetBlue illustrates this hardline stance. Despite the regulatory hurdles, Alaska Air remains optimistic about the deal. Brad Tilden, CEO of Alaska Air, stated, "We believe in this deal from both a business and cultural perspective. Our two companies are incredibly complementary, and we share a strong commitment to taking care of our guests." Hawaiian Airlines has also expressed enthusiasm about the merger. Peter Ingram, CEO of Hawaiian Holdings, said, "This transaction provides compelling value to our shareholders and will strengthen both airlines as we navigate through the recovery and beyond. The combined entity will have increased capacity to offer our passengers more options and an even better experience." If the deal receives regulatory approval, Alaska Air expects it to close in early 2022. The company will finance the acquisition through a combination of cash on hand and debt financing. They anticipate the transaction to be earnings accretive within the first year of closing. The Alaska Air-Hawaiian Airlines merger is a significant development in the airline industry. It has the potential to reshape the competitive landscape and create a formidable player in the U.S. market. The combined entity will offer enhanced connectivity, improved customer service, and increased efficiency. While regulatory challenges lie ahead, both companies are confident that the deal will ultimately be approved, allowing them to deliver greater value to their customers and stakeholders.

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