Alaska
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.
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.
Two US soldiers were wounded by a brown bear during a training exercise in Alaska on Thursday, the US Army stated.
Anchorage Daily News reported that the soldiers were from the 11th Airborne Division, and that the exercise had been a “land navigation training event” near Joint Base Elmendorf-Richardson.
State wildlife officials said that the bear attack seemed to be a defensive one, from a bear which had recently emerged from its den. Staff members from the Alaska Department of Fish and Game collected evidence at the scene in an attempt to learn more about the bear, such as its species and gender.
“The incident is currently under investigation, and we are working closely with installation authorities and local wildlife officials to gather all relevant information and ensure the safety of all personnel in the area,” the 11th Airborne Division said in a statement, reported ABC News.
ABC News also cited an 11th Airborne Division spokesperson, Lt.-Col. Jo Nederhoed, who said that the two soldiers had been seriously wounded, but were receiving care at a hospital in Anchorage, and had shown improvement by Saturday morning.
“We hope both individuals have a full and quick recovery, and our thoughts are with them during this time,” Fish and Game Regional Supervisor Cyndi Wardlow said in a statement reported by Anchorage Daily News. “In this case, having bear spray with them in the field may have saved their lives.”
Both of the soldiers reportedly had and used bear spray during the attack.
The bear’s condition and whereabouts are currently unknown.
Up, up and away … that’s where most travel prices are going.
It’s true. Not only are our nation’s geopolitical thrusts in the Mideast affecting the cost of your fill-ups, every component of your trip from airfares to car rentals and hotel stays are subject to price hikes.
Imagine filling up a jetliner with jet fuel that’s doubled in price. It’s enough to melt your credit card, regardless of the number of points you get for every dollar spent!
Because the price of oil affects everything, higher prices are eating away at your travel budget in many ways.
Bag fees
There’s lots of press on this. All airlines are increasing their checked-bag fees because of the jump in fuel prices.
Back in 2009, Alaska Airlines instituted a $15 fee for the first checked bag and $25 for the second bag. At the time, there was no charge for the first bag and a second bag was $25.
Last week, Alaska Airlines, along with other major airlines, increased its fees to $45 for the first checked bag and $55 for the second bag. Delta Air Lines charges the same.
Even if the cost of oil comes down, I don’t expect bag fees will ever be reduced.
Travelers who live in Alaska are somewhat insulated from the new hikes because both Delta and Alaska Airlines offer two free checked bags, with conditions:
1. Alaska offers two free checked bags for travelers flying to or from Alaska who are enrolled in Club 49. This does not affect other flights on Alaska. Separately, ATMOS credit card holders can get a free checked bag. Also, elite members of the ATMOS scheme get one or two free checked bags systemwide.
2. Delta offers two free checked bags for travelers flying to or from Alaska who are SkyMiles members who live in Alaska. Again, this does not apply to other Delta flights. Separately, Delta American Express cardholders can get a free checked bag.
3. Elite-level travelers with the oneworld airline cartel, including Alaska Airlines, can get one or two checked bags on American, British Airways, Japan Airlines, Qantas or other oneworld carriers.
[Anchorage’s international airport rolls out self-driving wheelchairs]
Main Cabin vs. Basic Economy
The spread between the lowest available price, Basic Economy, and a more flexible ticket, Main Cabin, has increased. While the difference used to be $20-$30 each way when the Basic Economy scheme was introduced in 2018, the round-trip upcharge now can exceed $100.
For example, the lowest Basic fare to Portland is $337 round-trip on Alaska Airlines. The upcharge to Main Cabin, with full loyalty points, pre-assigned seats and more flexibility on changes and cancellations, is $447, a 33% upcharge.
This trend is not specifically attributable to the new Iran War. It’s just a cost that continues to rise.
New fees
I’m impressed at the creativity of airline people who dream up new fees. Here are some of my favorites from Alaska Airlines:
1. Phone reservations: $15
2. Partner award booking fee: $12.50
3. Pet travel fee: $100 in the cabin, $200 in the baggage compartment with a kennel
4. Left on board item return fee: $20
On Condor Airlines, operating the only nonstop service from Anchorage to Europe, travelers can choose from four different bundles in economy class. The least-expensive, Economy Zero, from $840 round-trip, features fees for travelers:
1. Carry-on bag fee, up to 8kg: $35; a small bag like a purse always is included for free
2. Checked bag: $75
3. Airport check-in: $30
All three of these fees are included in the next-highest fare bucket, Economy Classic, from $900 round-trip. It’s cheaper to buy the bundle than it is to buy the components a la carte. Seat assignments are additional, from $25 for economy.
Airfares on the rise
There are a few good deals available for travel to select West Coast/Intermountain destinations in May, including:
1. Anchorage-San Francisco on Alaska Airlines, from $307 round-trip. Fly May 15-28 only. Add $90 round-trip for Main cabin.
2. Anchorage-Los Angeles on Alaska Airlines, from $317 round-trip. May 15-25 only. Add $90 round-trip for Main.
3. Anchorage-Phoenix on United, Delta or Alaska, from $267-$287 round-trip. Fly May 8-June 9 only. Add $90-$100 for Main.
4. Anchorage-Denver $357 round-trip on Delta. Fly May 8-June 9 only. Add $90 round-trip for Main.
For travel to other destinations, or later in the summer, be prepared to pay more.
Flying to Hawaii? Alaska Air’s nonstop prices out at $706 round-trip between May 30 and June 6. Add $110 round-trip for Main.
Nonstop flights from Anchorage to Salt Lake City start at $669 round-trip with Delta on May 17. That’s $100 more than the cost for the same flights last month. Add $90 more for Main.
Hotel costs continue to rise, accompanied by pesky resort fees.
The Outrigger on the Beach in Waikiki is a very nice beachfront hotel. It’s not plush, or the nicest property. But it’s solid. The cost is $334 per night.
But there’s more: a $50 per night resort fee, plus a variety of taxes and charges, totaling $112.55 per night.
Down in Seattle, the Sound Hotel in the Belltown neighborhood is marketed by Hilton. The discounted rate for “Honors” members — it’s free to join — is $313.34 per night for a king room in late May. Taxes and fees add an extra $56.40 per night.
There’s no appreciable bump yet for hotel rates as a result of the oil price surge. Yet. But if these hotel rates seem high, they’re in line with hotel rates in Anchorage this summer. At the Sheraton in Anchorage in June, it’s $450 per night, plus $54 in taxes and fees, when booked at Expedia.
Car rentals are not cheap
My go-to site for car rentals is the Costco site, which compares major brands and automatically includes Costco discounts.
In Las Vegas, for a one-day rental in May, Budget charges $67 per day, which includes taxes and fees of $22.77. In Anchorage, the same kind of car, medium SUV, costs $92.97 with Alamo.
The biggest differences so far in car rental rates seems to be the bill you’ll pay when you fill up the tank before returning. There’s no appreciable jump in prices because of the new war.
When it comes to making travel arrangements for the spring and summer, it’s more risky making completely non-refundable arrangements.
I made the decision to purchase most of my summer travel plans in advance, but only after determining I would not need to change the dates. Particularly with airline tickets, it’s expensive to change your dates.
There’s lots of uncertainty regarding travel arrangements, particularly international travel. As fuel prices go up due to oil shortages, travel companies will look for ways to recoup the increased costs. In most cases, those higher costs will be borne by travelers.
ANCHORAGE, Alaska (KTUU) – The reopening of the Strait of Hormuz has led to a decrease in oil prices nationally, but Alaska’s senior senator said the state faces a different situation that could threaten rural communities.
“If you can’t produce power because you don’t have the diesel or you just can’t pay the prices, your little communities can collapse,” Sen. Lisa Murkowski, R-Alaska, said at a Friday press conference at the Arctic Encounter Summit in Anchorage.
The price of oil has been a double-edged sword for Alaska. On one hand, the increased price of North Slope oil brings more revenue to the state, but consumer prices can also rise.
North Slope oil prices were $106.36 a barrel on Thursday.
“This is a very precarious time,” Murkowski said. “Our state has enjoyed a bounty because we have benefited from the higher prices of oil that goes into our treasury, but it’s the Alaskans in … the off-road communities that are threatened to be hit most hard.”
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