The top executives of Hawaiian and Alaska airlines said their companies are moving forward on an upcoming merger that they characterized as pro-consumer and pro-competitive because it allows them to compete more effectively in an industry dominated by larger
carriers Delta, United, American and Southwest, which together make up 80% of the U.S. market.

Peter Ingram, Hawaiian
Airlines president and CEO, and Ben Minicucci, Alaska Airlines president and CEO, made their remarks Thursday during a “fireside chat” at a “Hawaiian Airlines Business Luncheon” at the Hilton Hawaiian Village Waikiki Beach Resort. During the event, which was hosted by the Chamber of Commerce Hawaii, the airline leaders discussed the effect on Hawaii’s economy, business community and residents if Alaska Airlines is approved to buy Hawaiian for $1.9 billion.

Minicucci pledged to keep serving POG (passion orange guava drink) and indicated that he understands the importance of keeping robust and affordable neighbor island flights. He reiterated that union jobs are protected, and said when it comes to decisions about nonunion jobs and other integrations that Alaska Airlines planned to take time
to understand the needs. Alaska announced it was establishing a 16-member Hawai‘i Community Advisory Board, or HICAB, to honor the legacy and significance of the Hawaiian Airlines brand as the airlines work toward combining as well as to reinforce Alaska Airlines’ expanded role in Hawaii.

“Honolulu will become our second-largest base in our system, and it will be a big, big operation. We are going to need everything that’s required here today. Our intention is to grow this pie, not to keep it the same,” Minicucci said.

The boards of both airlines approved the deal Dec. 2,
but there are still a lot of unknowns, and more hurdles to go. The process is expected to take 12 to 18 months.

To move forward, the deal still must be approved by Hawaiian shareholders, as well as competition authorities, including the U.S. Department of Justice and state attorneys general — and that’s not always a slam dunk.

A special meeting has been called for Feb. 16 so that Hawaiian’s shareholders, who are required to give concurrence, can vote on the merger/acquisition of Hawaiian Airlines.

Hawaiian Airlines
spokesperson Alex Da Silva said in an email to the Honolulu Star-Advertiser after Thursday’s fireside chat that “approval of our combination with Alaska by our shareholders is a required step for us to proceed with the transaction. More information is available in our public regulatory filings. As for other steps, we will continue to share information via our public filings and with the regulatory authorities in the weeks and months ahead.”

So far, the timeline hasn’t been thrown off by a lawsuit filed Jan. 10 by Deann Owen in the U.S. District Court of the Southern District of New York against Hawaiian Holdings Inc., parent company of Hawaiian Airlines, and the company’s board of directors. The case alleges violations of the Securities and Exchange Act of 1934 related to the defendants’ efforts to sell the company to Alaska Air Group Inc. through merger vehicle Marlin Acquisition Corp. Owen’s suit, which demands a jury trial, claims the sale process is unfair and would result in irreparable injury, and thus seeks to enjoin an upcoming stockholder vote on the proposed transaction.

Among Owen’s claims is that “the definitive proxy statement fails to adequately disclose why the company board was willing to settle on a purchase price of $18 per share of company common stock after the initial offering was at a purchase price of $20 per share of company common stock.”

Another claim is that the definitive proxy statement “fails to adequately disclose why no market check was conducted for other possible strategic alternatives, including the possibility of an investment by a potential equity partner.”

Owen’s suit also alleges that Hawaiian insiders are the primary beneficiaries of the proposed transaction, not the company’s public stockholders such as herself. Moreover, she claims that the board and the company’s executive officers “are conflicted because they will have secured unique benefits for themselves from the proposed transaction not available to plaintiff as a public stockholder of Hawaiian.”

Some industry analysts also have speculated that Hawaiian could face headwinds during the regulatory process given that JetBlue and Spirit Airlines just asked an appeals court to fast-track review of a federal judge’s decision to block JetBlue’s proposed $3.8 billion purchase of Spirit.
U.S. District Judge William Young on Jan. 16 blocked JetBlue’s purchase of Spirit Airlines after the Justice Department filed a suit saying the purchase would drive up fares by eliminating Spirit, the nation’s biggest low-cost airline.

Young said the government had proved that the merger “would substantially lessen competition” and
violated a century-old antitrust law.

Hawaiian and Alaska officially have filed with the U.S. Justice Department for antitrust clearance, and both
Ingram and Minicucci maintain that their situation is vastly different from that of JetBlue and Spirit. They said their deal doesn’t involve a low-cost carrier; their operations have little overlap; and customers will benefit from expanded travel options and services.

“We feel strongly as we go through the process that our merger will prevail,” Minicucci said.

There’s potentially a lot riding on the merger, given Hawaiian’s financial challenges of the past several years. The deal that is
moving forward with Alaska includes $900 million in
Hawaiian debt.

Hawaiian reported Tuesday a fourth-quarter loss of $101.2 million, or $1.96 per share. When adjusted for nonrecurring costs, the loss came to $2.37 per share.

The adjusted results missed Wall Street expectations. Three analysts surveyed by Zacks Investment Research had estimated an average loss of $2.35 per share per adjusted share.

Hawaiian posted revenue of $669.1 million in the period, which also fell short
of Wall Street expectations, which were estimated at an average of $669.2 million by the three analysts surveyed by Zacks Investment
Research.

The airline ended the year with revenue of $2.72 billion and a loss of $260.5 million, or $5.05 per share.

While Hawaiian has said its balance sheet is strong, the airline’s debt situation has left some speculating that if the merger with Alaska doesn’t work out,
Hawaiian could face a third bankruptcy. However, Ingram indicated during the fireside chat that Hawaiian had not been actively searching for a buyer before entering into negotiations with Alaska.

“Hawaiian wasn’t shopping itself last year. We weren’t standing on the side with a big for-sale sign,” he said. “We were working on our own plan as an independent airline. We have a lot
of confidence in that. I’ll acknowledge the last few years have been very challenging starting with the pandemic, including the slow return of Japanese visitors, which is gradually improving over the course of 2023.”

Ingram said up until the deal was struck, “Plan A” was to “operate as a carrier with our stand-alone plan. We continue to compete aggressively as we complete our recovery from the challenges of the last couple of years.”

Ingram said “Plan B” was getting the deal agreed on with Alaska.

“To me all that changed
after we made the announcement is ‘Plan B’ is now ‘Plan A.’” he said. “We’ve agreed that this is the plan going forward. We think it is a better outcome for our company. It’s a better outcome for our employees. It’s a
better outcome for our shareholders. It’s good for consumers. But if for some reason we had to go back to the other plan, we are completely confident in our ability to execute that as well.”

Da Silva said in an email to the Star-Advertiser that Hawaiian in 2024 will continue “strengthening our business and enhancing the guest experience with better techn­ology, exciting products including complimentary Starlink WIFI, a new flagship aircraft in our 787-9, and the continued expansion of our network.”

———

The Associated Press
contributed to this report.