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Hawaiian, Alaska leaders tout airline deal

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Hawaiian, Alaska leaders tout airline deal


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.

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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.

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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.

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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.

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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.”

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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.

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2 bodies found in plane submerged upside down in Alaska lake

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2 bodies found in plane submerged upside down in Alaska lake


FILE PHOTO/Agence France-Presse

ANCHORAGE, Alaska — The bodies of two men have been recovered from a plane that was found face down in a lake, Alaska State Troopers said Saturday.

Troopers were notified late Friday of the upside-down aircraft in Six Mile Lake near the Athabascan community of Nondalton, located about 200 miles (322 kilometers) southwest of Anchorage.

READ: Crammed with tourists, Alaska’s capital wonders what will happen as its magnificent glacier recedes

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The bodies of Dave Hedgers, 58, and Aaron Fryer, 45, were found by a dive team dead inside the aircraft, troopers said in an online post. No hometowns were provided.

The bodies will be sent to the State Medical Examiner’s Office in Anchorage.

READ: After a glacial dam outburst destroyed homes in Alaska, a look at the risks of melting ice masses

The National Transportation Safety Board said on the social media platform X that it would investigate the crash of a Taylorcraft BC-12 aircraft near Nondalton.



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BOGO marketing opportunity available on Alaska's No. 1 podcast — The Must Read Alaska Show

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BOGO marketing opportunity available on Alaska's No. 1 podcast — The Must Read Alaska Show


The Must Read Alaska Show podcast is the top-rated podcast in Alaska, according to Feedspot, one of the most-relied-on rating services.

Host John Quick has reached thousands of Alaskans with more than 400 podcast episodes, and has guests ranging from presidents of countries to Alaska entrepreneurs.

In one recent episode, Quick interviews the man who was the communications director for the Trump campaign in 2020: Tim Murtaugh, author of a new book, “Swing Hard, in Case You Hit It.“

Your company, agency, or campaign can be part of the fun and great MRAK energy with sponsorship of the show, receiving recognition at the beginning and end of each episode, as well as in the show summary on this website.

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Quick is offering a BOGO – Buy one, get one month free of sponsorship, to the next entity that signs up. Here are the sponsorship details.

Feedspot ratings for Alaska podcasts are at this link.



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After the Alaska House worked past midnight, some wonder: does the legislative session deadline matter?

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After the Alaska House worked past midnight, some wonder: does the legislative session deadline matter?


As the dust settled after the last frantic 24 hours of the legislative session that concluded early Thursday, some lawmakers wondered if their final votes could lead to a constitutional challenge.

Driven by a looming deadline and a pileup of bills over the past two years, lawmakers passed more than 40 measures in the final hours of the session. Five of them passed the House after midnight in the early hours of Thursday morning, despite a constitutional requirement that the Legislature conclude its work at the end of the 121st day of the session, which was Wednesday.

The Senate adjourned its session shortly before midnight on Wednesday, but the House adjourned after 1 a.m. on Thursday, not before voting on several measures.

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At 12:01 a.m., the House voted on House bill 29, prohibiting insurance companies from discriminating against elected officials.

At 12:03 a.m., members passed House Bill 189, allowing employees to begin serving alcohol at 18, instead of 21.

At 12:08 a.m., they passed House Bill 122, allowing the Alaska Railroad Corp. to replace its terminal facility in Seward.

At 12:12 a.m. they passed House Bill 203, allowing private employers to use an electronic payroll system.

At 12:14 a.m., they voted on House Bill 19, related to commercial boat registration.

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When House minority members then proceeded to bring a controversial election bill to a vote, several House Republicans — who had voted for some of the other post-midnight bills — said that lawmakers were violating the state constitution and were required to adjourn, or else risk a legal challenge to the legislation they adopt.

Shortly after 1 a.m., Rep. Kevin McCabe, a Big Lake Republican who sponsored House Bill 29, called the past-midnight legislating “among the most disrespectful and terrible things I have ever seen done to our constitution and to the state of Alaska residents.”

[A look at some of the bills that failed to pass the Alaska Legislature this year]

In the Senate, President Gary Stevens, R-Kodiak, and Majority Leader Cathy Giessel, R-Anchorage, both said that based on past experience, legislation passed after midnight would be upheld.

“The courts do not overturn the Legislature if we go over,” said Stevens, who has served in the Legislature for over 20 years.

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But Senate Rules Chair Bill Wielechowski, D-Anchorage, an attorney who has served in the Legislature for over a decade, said Friday that “it’s going to be close.”

“I think there’s a pretty fair chance that anything passed after midnight is unconstitutional,” he said, adding that “the whole world could see it was after midnight.”

Wielechowski said the Alaska Department of Law will review the legislation “and make the call on it.”

Asked Friday, Department of Law spokesperson Patty Sullivan said the department is “reviewing all legislation that was passed by the Legislature and that will be presented to the governor for consideration.”

“Any legal issues we identify during that process will be provided to our client — the governor,” said Sullivan.

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If Gov. Mike Dunleavy allowed the bills to become law, they could remain in effect “until somebody challenges it,” Wielechowski said. Dunleavy could also decide to veto the legislation.

Typically, to challenge statutes in court, plaintiffs must have been harmed by the legal violation. Wielechowski said that in this case, “arguably anybody in the state would have standing, because you’re alleging a violation of the constitution, and arguably, the whole state is impacted.”

“The constitution is pretty clear — but I don’t know — a court could find some creative way of extending it,” said Wielechowski.

A 1989 Alaska Supreme Court case related to legislators’ decision to blow past a midnight deadline resulted in a finding that the 120-day session deadline translated into a 121-day session, because the first day was of the session was not included in the count.

The single-subject rule

The Legislature adopted more than 40 bills in the last days of the session, but that number isn’t a true reflection of the number of policy proposals adopted by lawmakers — or the crush of work they handled in the final day of the session.

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“When you factor the bill and ideas that were put into other bills, then it’s a substantially higher number probably — probably at least twice that,” said Wielechowski.

The end of the session was replete with what is commonly referred to as “bill stuffing” — the practice of amending one bill to include an additional bill inside it.

A bill to revamp Alaska’s workers’ compensation program was amended to include within it a 10-year extension of a senior benefits program that provides a small monthly stipend to around 9,000 low-income elderly Alaskans.

A measure meant to make it easier for out-of-state and retired teachers to work in Alaska schools was amended to include a $5,000 bonus for every teacher who has earned a national board certification.

A bill relating to the Alaska Housing Finance Corporation’s mortgage loans was amended to include within it a so-called “green bank” to offer loans for renewable energy projects.

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A bill expanding Medicaid payment eligibility was amended to include within it a change to the method for determining eligibility for Alaska’s Supplemental Nutrition Assistance Program.

A bill extending boards and commissions was amended to include within it a measure to offer child care tax credits, and another meant to limit the number of hunting guides in some parts of the state.

“There’s probably 20 bills here on the floor tonight that have multiple bills packed into bills — small and large — and I don’t think it’s a cause for concern,” Sen. Scott Kawasaki, a Fairbanks Democrat, said on Wednesday, speaking about a bill regulating students’ hunting and fishing licenses that was amended to include a provision related to pet ownership. That bill ultimately failed to pass.

Under the state constitution, bills must be confined “to one subject.” But most lawmakers took in stride the efforts to stack some bills into others in the final hours of the session.

Wielechowski said the single subject rule is one of the most “hotly contested, under the radar” issues lawmakers face near the end of the session.

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Nonpartisan legislative attorneys have given lawmakers guidance that the rule is “generally pretty broadly interpreted,” Wielechowski said.

But a memo from legislative attorneys prepared earlier this month warned that a bill extending the big game commercial services board, the board of massage therapists, the marijuana control board and the Alaska Commission on Aging, “may violate the constitutional provision that limits bills to one subject.”

“I cannot identify a single subject that would unite all these subjects in a way that would likely withstand a challenge,” wrote attorney Allison Radford in the memo, which was requested by House Rules Chair Craig Johnson, R-Anchorage.

“Failure to comply with the single subject requirement could jeopardize the entire underlying bill, if the bill is challenged,” Radford added.

Johnson was responsible for the change that placed several board and commission extensions in a single measure, Senate Bill 189. He did not respond Friday to an interview request.

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Rep. Zack Fields, an Anchorage Democrat who sits on the Rules Committee, said he was not concerned about the legal opinion.

“To be honest, I didn’t care because I don’t think that extending boards and commissions hurts anyone, and therefore, no one would litigate,” Fields said on Friday.

Fields on Wednesday proposed an amendment to Senate Bill 189 to include inside it a child care tax credit proposal authored by Rep. Julie Coulombe, R-Anchorage. Fields said the child care tax credit could fit into the bill because, like some of the commissions it extends, child care relates to the broad subject of “health.”

“Frankly, I don’t think anyone is going to litigate about child care. Who is harmed by that? Literally no one,” said Fields.

Wielechowski said Alaska courts in the past have taken a “pretty expansive definition of what the single subject is.”

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Fields said many bills adopted by lawmakers cause legislative attorneys to point out potential questions related to the single subject rule, “and no one cares because they shouldn’t.”

“I don’t think single-subject is actually an issue that matters,” said Fields.

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