Alaska Airlines announced on Sunday that it has entered into an agreement to acquire Hawaiian Airlines for $1.9 billion, including $900 million of Hawaiian Airlines' net debt. The deal, which is expected to close in 12-18 months, will see Alaska Airlines pay $18.00 per share in cash to acquire Hawaiian Holdings, the parent company of Hawaiian Airlines. The transaction aims to unlock more travel destinations and expand access throughout the Pacific region, continental United States, and globally.

The combined organization will be based in Seattle under the leadership of Ben Minicucci, CEO of Alaska Airlines, while Honolulu will become a key hub for Alaska Airlines. The airlines have stated that both the Alaska Airlines and Hawaiian Airlines brands will be preserved, but they will operate on a single platform. The merger will provide service to a total of 138 destinations, including non-stop flights to 29 top international destinations in the Americas, Asia, Australia, and the South Pacific.

The announcement comes as Alaska Air Group, Inc., the parent company of Alaska Airlines, had previously cut its full-year profit outlook due to rising expenses from higher fuel prices, impacting the outlooks of major US airlines. However, Alaska Airlines expects the acquisition of Hawaiian Airlines to generate high single-digit earnings accretion within the first two years, with no significant impact on long-term balance sheet metrics.

Alaska Airlines and Hawaiian Airlines are confident that this merger will enhance the travel experience for passengers and expand options for travelers on the West Coast and in Hawaii. Peter Ingram, President and CEO of Hawaiian Airlines, expressed his enthusiasm for joining forces with Alaska Airlines, stating that the two airlines have a shared culture of service and a complementary network.

The deal is expected to face scrutiny from federal regulators, given the Justice Department's recent track record of enforcing antitrust laws to prevent deals that could decrease competition in various industries, including aviation. The department has previously sued to prevent partnerships and acquisitions, such as the American Airlines and JetBlue Airways partnership in New York and Boston. It is currently suing to stop JetBlue from acquiring Spirit Airlines. The merger between Alaska Airlines and Hawaiian Airlines would result in the combined company controlling just over 8 percent of the market, which is relatively small compared to the dominance of the four largest carriers in the US.

Unions representing thousands of workers at both Alaska Airlines and Hawaiian Airlines have expressed their intention to work closely with the airlines to ensure that workers benefit from the merger. The Association of Flight Attendants, which represents 9,000 Alaska and Hawaiian workers, emphasized that their support of the merger would depend on whether it improves conditions for flight attendants, in addition to the benefits described for shareholders and consumers.

Overall, the acquisition of Hawaiian Airlines by Alaska Airlines marks a significant development in the airline industry, with the potential to provide more travel options and convenience for passengers in the Pacific region and beyond. The merger will bring together two airlines with a strong presence in their respective markets and a shared commitment to providing exceptional service.