eastunder
12 months ago
Joint Press Release, issued by Hawaiian Holdings, Inc. and Alaska Air Group, Inc., dated December 3, 2023
https://www.sec.gov/Archives/edgar/data/766421/000119312523287918/d786276dex991.htm
Alaska Airlines and Hawaiian Airlines to Combine,
Expanding Benefits and Choice for Travelers Throughout Hawai‘i and the West Coast
Combined company to maintain Alaska Airlines’ and Hawaiian Airlines’ strong, high-quality brands, supported by a single, compelling loyalty offering.
Expands fifth largest U.S. airline to a fleet of 365 narrow and wide body airplanes enabling guests to reach 138 destinations through our combined networks and more than 1,200 destinations through the oneworld Alliance.
Honolulu to become a key hub for the combined airline with expanded service for residents of Hawai‘i to the Continental U.S. and creating new connections to Asia and throughout the Pacific for travelers across the U.S.
Commitment to Hawai‘i remains steadfast, including maintaining robust Neighbor Island air service, and a more competitive platform to support growth, job opportunities for employees, community investment and environmental stewardship.
Committed to maintaining and growing union-represented workforce in Hawai‘i.
Combination will result in immediate value creation with sizable upside. All-cash transaction of $18 per share offers attractive premium for Hawaiian Airlines shareholders and is expected to be accretive to Alaska’s earnings within two years post-close with at least $235 million of expected run-rate synergies.
Investor conference call scheduled for today at 5:00 p.m. ET / 2:00 p.m. PT / 12:00 p.m. HT.
SEATTLE and HONOLULU, Dec. 3, 2023 /PRNewswire/ – Alaska Air Group, Inc. (NYSE: ALK), and Hawaiian Holdings, Inc. (NASDAQ: HA) today announced that they have entered into a definitive agreement under which Alaska Airlines will acquire Hawaiian Airlines for $18.00 per share in cash, for a transaction value of approximately $1.9 billion, inclusive of $0.9 billion of Hawaiian Airlines net debt. The combined company will unlock more destinations for consumers and expand choice of critical air service options and access throughout the Pacific region, Continental United States and globally. The transaction is expected to enable a stronger platform for growth and competition in the U.S., as well as long-term job opportunities for employees, continued investment in local communities and environmental stewardship.
As airlines rooted in the 49th and 50th U.S. states, which are uniquely reliant upon air travel, Alaska Airlines and Hawaiian Airlines share a deep commitment to caring for their employees, guests and communities. This combination will build on the 90+ year legacies and cultures of these two service-oriented airlines, preserve both beloved brands on a single operating platform, and protect and grow union-represented jobs and economic development opportunities in Hawai‘i, with a combined network that will provide more options and added international connectivity for travelers through airline partners including, the oneworld Alliance.
“This combination is an exciting next step in our collective journey to provide a better travel experience for our guests and expand options for West Coast and Hawai‘i travelers,” said Ben Minicucci, Alaska Airlines CEO. “We have a longstanding and deep respect for Hawaiian Airlines, for their role as a top employer in Hawai‘i, and for how their brand and people carry the warm culture of aloha around the globe. Our two airlines are powered by incredible employees, with 90+ year legacies and values grounded in caring for the special places and people that we serve. I am grateful to the more than 23,000 Alaska Airlines employees who are proud to have served Hawai‘i for over 16 years, and we are fully committed to investing in the communities of Hawai‘i and maintaining robust Neighbor Island service that Hawaiian Airlines travelers have come to expect. We look forward to deepening this stewardship as our airlines come together, while providing unmatched value to customers, employees, communities and owners.”
“Since 1929, Hawaiian Airlines has been an integral part of life in Hawai‘i, and together with Alaska Airlines we will be able to deliver more for our guests, employees and the communities that we serve,” said Peter Ingram, Hawaiian Airlines President and CEO. “In Alaska Airlines, we are joining an airline that has long served Hawai‘i, and has a complementary network and a shared culture of service. With the additional scale and resources that this transaction with Alaska Airlines brings, we will be able to accelerate investments in our guest experience and technology, while maintaining the Hawaiian Airlines brand. We are also pleased to deliver significant, immediate and compelling value to our shareholders through this all-cash transaction. Together, Hawaiian Airlines and Alaska Airlines can bring our authentic brands of hospitality to more of the world while continuing to serve our valued local communities.”
Complementary Networks and Greater Choice for Alaska Airlines and Hawaiian Airlines’ Combined 54.7 million Annual Passengers
The combination of complementary domestic, international, and cargo networks is positioned to enhance competition and expand choice for consumers on the West Coast and throughout the Hawaiian Islands through:
Preserving outstanding brands: The combined airline will maintain both industry-leading Alaska Airlines and Hawaiian Airlines brands while integrating into a single operating platform, enabling the remarkable service and hospitality of each to be enjoyed by passengers with continued excellence in operational reliability, trust and guest satisfaction for which both companies have been consistently recognized.
An enhanced product offering for a wide range of consumers: The combination preserves and expands high-quality, best-in-class product offerings with price points to make air travel accessible to a wide range of consumers across a range of cabin classes, including greater choice between Alaska Airlines’ high-value, low-fare options and Hawaiian Airlines’ international and long-haul product on par with network carriers.
Complementary networks expand travel options: Passengers traveling throughout the Continental U.S., U.S. West Coast and across the Pacific will benefit from more choice and increased connectivity across both airlines’ networks, with service to 138 destinations including non-stop service to 29 top international destinations in the Americas, Asia, Australia and the South Pacific, and combined access to over 1,200 destinations through the oneworld Alliance.
Expanded service for Hawai‘i: For Hawai‘i residents, the combination will expand service and convenience by tripling the number of destinations throughout North America that can be reached nonstop or one stop from the Islands, while maintaining robust Neighbor Island service and increasing air cargo capacity.
Strategic Honolulu hub: Honolulu will become a key Alaska Airlines hub, enabling greater international connectivity for West Coast travelers throughout the Asia-Pacific region with one-stop service through Hawai‘i.
Increased loyalty program benefits: The transaction will connect Hawaiian Airlines’ loyalty members with enhanced benefits through an industry-leading loyalty program for the combined airline, including the ability to earn and redeem miles on 29 global partners and receive elite benefits on the full complement of oneworld Alliance airlines, expanded global lounge access and benefits of the combined program’s co-brand credit card.
Delivering Substantial Benefits for Employees and Communities in Hawai‘i
As one of Hawai‘i’s largest employers, Hawaiian Airlines has a long legacy of commitment to its employees, who shaped the company over its 94-year history, and to local communities, culture, and the natural environment. As an integrated company, Alaska Airlines and Hawaiian Airlines will continue this stewardship and maintain a strong presence and investment in Hawai‘i. The combined company will drive:
Growth in union-represented jobs: Maintain and grow union-represented jobs in Hawai‘i, including preserving pilot, flight attendant, and maintenance bases in Honolulu and airport operations and cargo throughout the state.
Strong operational presence: Maintain a strong operations presence with local leadership and a regional headquarters in Hawai‘i to support the combined airlines’ network.
Opportunities for employees: Provide more opportunities for career advancement, competitive pay and benefits, and geographic mobility for employees.
Expansion of workforce development initiatives: Continue and expand access to workforce development initiatives, including Hawaiian Airlines’ partnership with the Honolulu Community College Aeronautics Maintenance Technology Program and Alaska Airlines’ Ascend Pilot Academy among others, to support future jobs and career opportunities in Hawai‘i and beyond.
Investment in local communities: Continue to invest in Hawai‘i communities, combining and expanding the two airlines’ commitments, and work with local communities and government to build a vibrant future for Hawai‘i.
Perpetuation of culture: Committed to promoting regenerative tourism in the Hawaiian Islands and investing in Hawaiian language and culture, continuing and building upon Hawaiian Airlines’ existing programs.
Becoming an Even More Sustainable Combined Airline
Alaska Airlines is committed to building upon both Alaska Airlines’ and Hawaiian Airlines’ strong commitments to environmental stewardship, including Alaska Airlines’ five-part path to net zero by 2040 and sustainability goals in areas of carbon emissions and fuel efficiency, waste, and healthy ecosystems. In 2022, Alaska Airlines made its largest Boeing fleet order in its 90-year history, focused on the Boeing 737-MAX aircraft, which are 25% more fuel-efficient on a seat-by-seat basis than the aircraft they replace, and continued to expand use of route optimization software to help dispatchers develop routes that save fuel, time, and emissions. Both airlines are actively working to advance the market for sustainable aviation fuel (SAF) in their respective geographies. These climate-focused efforts will continue, including continued investment in local sourcing.
Compelling Strategic and Financial Rationale, Generating Outsized Value Creation
The combination fits strategically with Alaska Airlines’ sustained focus on expanding options for West Coast travelers and creates an important new platform to further enhance Alaska Airlines’ above industry-average organic growth. The transaction is designed to deliver attractive value creation for Alaska Airlines’ shareholders while providing a compelling premium for Hawaiian Airlines shareholders.
All-cash transaction of $18.00 per share for a total equity value of $1.0 billion provides a compelling premium for Hawaiian Airlines shareholders.
Transaction multiple of 0.7 times revenue, approximately one third the average of recent airline transactions.
Approximately $235 million of expected run-rate synergies reflect a conservative estimate of the transaction’s synergy potential; these exclude other identified upside opportunities that could be realized.
Expected to generate high single digit earnings accretion for Alaska Airlines within the first two years (high-teens three+ years) post-close and mid-teens ROIC by year three, excluding integration costs, with returns above Alaska Airlines’ cost of capital.
No anticipated material impact on long-term balance sheet metrics, with return to target leverage levels expected within 24 months.
Conditions to Close
The transaction agreement has been approved by both boards. The acquisition is conditioned on required regulatory approvals, approval by Hawaiian Holdings, Inc. shareholders (which is expected to be sought in the first quarter of 2024), and other customary closing conditions. It is expected to close in 12-18 months. The combined organization will be based in Seattle under the leadership of Alaska Airlines CEO Ben Minicucci. A dedicated leadership team will be established to focus on integration planning.
Advisors
BofA Securities and PJT Partners are serving as financial advisors and O’Melveny & Myers LLP is serving as legal advisor to Alaska Airlines. Barclays is serving as financial advisor and Wilson Sonsini Goodrich & Rosati, Professional Corporation is serving as legal advisor to Hawaiian Airlines.
eastunder
12 months ago
Hawaiian Airlines' parent surges on $1.9 billion buyout deal with Alaska Air
Mon, December 4, 2023 at 5:31 AM MST·2 min read
(Reuters) — Shares of Hawaiian Holdings (HA), the parent of Hawaiian Airlines, nearly tripled in premarket trade on Monday after Alaska Air Group (ALK) agreed to acquire it for $1.9 billion, including debt.
Hawaiian shares were trading at $13.60 premarket, below Alaska's offer price of $18 per share made public on Sunday, with some analysts saying regulatory approval was far from certain.
The company's shares had taken a beating in recent months due to the impact of the Maui wildfires, high fuel costs and jet engine recall issues at some of its Airbus SE planes. Its shares have fallen 52.6% so far this year.
Hawaiian presently has a negative price-to-earnings (PE) ratio of 1.5, reflecting losses, compared to a positive forward 12 months PE ratio of 8.2 for Alaska Air, according to LSEG.
Alaska and Hawaiian said on Sunday the deal, valued at $929.4 million on an equity basis, will expand their networks and offer more choices for passengers.
"This transaction makes good common sense for both airlines," TD Cowen analyst Helane Becker wrote in a note.
The deal will enable Alaska to grow in the lucrative Asia Pacific market, while Hawaiian customers can travel non-stop to the U.S. mainland, Becker added.
However, regulatory resistance to the merger is a possibility. Under a hawkish Biden administration, the U.S. Justice Department had filed a lawsuit in March to stop JetBlue (JBLU) from buying Spirit Airlines (SAVE).
JetBlue shares were up 1%, while Spirit shares were up 4.5% on Monday before the bell.
Alaska Air's CEO Ben Minicucci in an interview on Sunday expressed confidence regulators would approve the deal by the end of 2024 because the two airlines overlap in just 12 of the 1,400 flights they collectively operate.
Shares of Seattle-based Alaska Air were down 9.36% before the bell.
eastunder
1 year ago
Hawaiian Airlines sees advantage in Amazon pivot to Airbus freighter
Eric Kulisch
Mon, September 18, 2023 at 5:00 AM MDT·7 min read
https://finance.yahoo.com/news/hawaiian-airlines-sees-advantage-amazon-110000219.html
WASHINGTON — The introduction of Airbus A330 freighters in Amazon’s air logistics operation opens the door for Hawaiian Airlines to capture more business from the retail giant if it proves a reliable partner under a new arrangement to fly parcels that starts next month, the company’s chief executive said.
Hawaiian Airlines (NASDAQ: HA) received its first A330-300 freighter in July and is ready to begin flights for Amazon Air in October while air and maintenance crews finish familiarizing themselves with the aircraft and airport ground procedures for cargo. The Honolulu-based carrier will eventually operate 10 package freighters on Amazon’s behalf under a 10-year contract struck last fall.
Amazon (NASDAQ: AMZN) appears to have identified the A330, a midsize widebody aircraft, as the next platform for its air logistics activity. Older Boeing 767s it primarily deploys are starting to reach the end of their service life and passenger planes available to convert to a cargo configuration will soon be scarce.
Hawaiian CEO Peter Ingram told FreightWaves that presents an opportunity for the airline to grow its Amazon business, noting that Hawaiian faced a similar decision 13 years ago when it started taking A330-200s for its passenger fleet after having flown 767s up to that point.
“I think if you look at the Amazon fleet, you can speculate that they’re thinking about the A330-300 in their fleet as a combination of growth and also replacement of the 767s that they have been operating with various carriers throughout their network. We see the opportunity for growth. It’s going to be up to us to operate efficiently and well,” Ingram said in an interview last week on the sidelines of the U.S. Chamber of Commerce’s Global Aerospace Summit here.
“We’re very on-time focused in our passenger business and I know Amazon is very on- time focused in their business. So the best way we can put ourselves in a position for growth in the future is by operating well, with a high completion factor and with great on-time performance. That’s something our team has been familiar with on the passenger side and we intend to do the same on the freighter side,” Ingram said.
Amazon has informed Hawaiian Airlines what routes the first two planes will fly, but Ingram declined to disclose them.
A search of flight activity on Flightradar24 shows the first A330 freighter conducting short practice flights at San Bernardino Airport in California, where Amazon has its West Coast regional air hub, in the first week of September. On Tuesday, the plane arrived at Cincinnati/Northern Kentucky International Airport (CVG), where Amazon’s national superhub is located and where Hawaiian Airlines has established its pilot base.
Whether San Bernardino becomes the first destination for the A330 is unclear. The airport may simply have been a convenient station for pilot training that has fueling contracts in place. A trunk route between CVG and a key secondary hub like San Bernardino, however, is a logical choice for a large cargo jet like the A330. Amazon media representatives did not respond to questions about plans for the new cargo jet.
Hawaiian will operate the A330 cargo jets in Amazon’s air network around the U.S. mainland, helping to expedite delivery of online orders, but would be open to discussing the possibility of flying trans-Pacific or other international routes to deliver imported goods if Amazon had such a need, Ingram said.
New kid on the block
Amazon has two incumbent air partners that operate 767s on its behalf. Air Transport Services Group (NASDAQ: ATSG), which leases cargo aircraft and also flies them for customers that need that service, operates 47 Boeing 767s for Amazon. Atlas Air has 18 767s in the Amazon system.
Amazon this year returned to ATSG five 767-200s that are older and had reached the end of their lease term. The Amazon fleet outsourced to ATSG mostly consists of larger 767-300s. Amazon officials have said the 10 Airbus A330s being placed with Hawaiian are to replace 767-200s, not for growth.
Ingram said Amazon approached Hawaiian to bid for the transport service contract after it decided to invest in the A330 fleet because of the airline’s experience operating the A330 for passengers.
ATSG Chief Executive Rich Corrado said Hawaiian from the beginning had the inside track for the job.
Amazon “tends to select carriers that already have the aircraft on certificate. It takes an airline about 10 months to a year to put an aircraft on certificate [with the Federal Aviation Administration] and it also costs a lot of money, somewhere between $6 million and $8 million, to do that type of work. So that puts us at a disadvantage in bidding where we didn’t have it [the A330] on certificate,” Corrado said on the company’s third-quarter 2022 earnings call with analysts.
Mike Berger, ATSG’s chief strategy officer and then-chief commercial officer, didn’t rule out ATSG becoming an A330 operator in the future. The company two years ago made a strategic decision to diversify its leasing program by investing in used A330 passenger jets and paying to have them overhauled to carry large pallets. It has secured the right to convert 29 of the medium widebodies with Airbus affiliate Elbe Flugzeugwerke (EFW). It already has 20 commitments from international customers. The first one is scheduled to arrive at the production facility in October.
“We see Amazon historically look for multiple providers of aircraft as they develop their network so we stand ready to support Amazon as our largest customer and shareholder in the future. The Amazon decision really does validate … that the 330 is the next aircraft that we want to get ourselves into” as 767 feedstock becomes more difficult to find, Berger said.
Amazon is leasing the Airbus jets from Seattle-based Altavair, which is also sending the post-passenger planes to EFW for ruggedizing the cabin interior and installing a large cargo door. Ingram said Hawaiian will receive the second A330 in December and that it will enter service early next year. The airline will have nine freighters by the end of 2024, with the 10th one following in early 2025. The initial converted freighter is less than 5 years old and never entered service with original customer Hong Kong Airlines.
The Amazon deal, which includes an option for the retailer to eventually acquire a minority stake, represents the first time Hawaiian Airlines has ever operated dedicated cargo jets. It is in the final stage of implementing a detailed project plan for launching what is essentially a startup airline within an airline.
Preparation includes hiring about 160 pilots for the freighter operations, training them and establishing work rules that differ from those for A330 passenger aircraft. Pilots will also be based on the mainland, instead of Hawaii. Ingram said the airline will probably carry out line maintenance in several locations based on the flight schedule Amazon determines.
In April, Hawaiian completed the transition of A330 maintenance from Delta TechOps to its own personnel. It operates 24 A330-200 passenger jets. Executives said that self-managing maintenance will allow it to exercise greater control over day-to-day operations and save money, especially as the A330 freighters are introduced into the fleet and lower per-unit costs.
Meanwhile, Hawaiian Airlines expects to receive its first Boeing 787 passenger jets early next year, some of which will replace early model A330s. Ingram said the planes, which are slightly larger than the A330, will provide more space for cargo.
eastunder
1 year ago
Hawaiian Airlines preps for October start of Amazon cargo service
Eric Kulisch
Wed, July 26, 2023 at 6:53 AM MDT·3 min read
https://finance.yahoo.com/news/hawaiian-airlines-preps-october-start-125352102.html
Hawaiian Airlines received the first of 10 Airbus A330-300 converted freighters at its Honolulu base earlier this month and will begin flying it under contract to retail giant Amazon in October, CEO Peter Ingram said Tuesday during a phone briefing about the company’s second-quarter results.
The carrier will spend the next few months familiarizing air, ground and maintenance crews with the aircraft and implementing standard operating procedures, he said.
Establishing infrastructure and systems to run a freighter airline separate from passenger operations is a drag on the bottom line at the moment because the freighters won’t have a material impact on revenue until 2024, the Hawaiian Airlines (NASDAQ: HA) chief explained.
Amazon (NASDAQ: AMZN) is leasing 10 Airbus A330-300 jets from Seattle-based Altavair and will place them with Hawaiian to fly and maintain under a 10-year contract signed in October. Amazon has said the planes will replace aging Boeing 767 medium widebody jets sourced from another lessor. The airframes are being converted from passenger aircraft to freighters by Elbe Flugzeugwerke GmbH, an Airbus joint venture with Singapore-based ST Engineering.
The first aircraft, delivered in Amazon’s Prime Air logo scheme, is less than 5 years old and never entered passenger service with any carrier after Hong Kong Airlines didn’t accept it, according to trade publication ch-aviation.
Hawaiian Airlines executives had previously targeted a fourth-quarter start of revenue service for Amazon, but the October timetable is the most specific the company has been so far.
Altavair and EFW are expected to deliver a second A330 converted freighter by the end of the year and the remainder of the order in 2024. The planes will initially be based at Amazon Air’s U.S. hub at Cincinnati-Northern Kentucky International Airport, according to ch-aviation. Amazon has said the planes will carry packages within its mainland air network, helping meet customer expectations for Next Day and Second Day deliveries.
Hawaiian Airlines has hired about 160 additional pilots for its Airbus freighter fleet. The company currently has about 25% more pilots than it did at the end of 2019, including for the first Boeing 787-9 Dreamliners the company plans to start deploying in January. The higher number of pilots in training and a new labor contract that boosts pilot pay by 33% over four years will raise third-quarter costs 4.5 points, said CFO Shannon Okinaka.
In April, Hawaiian completed the transition of A330 maintenance from Delta TechOps to its own personnel. It operates 24 A330-200 passenger jets. Executives said that self-managing maintenance will allow it to exercise greater control over day-to-day operations and save money, especially as the A330 freighters are introduced into the fleet and lower per unit costs.
Hawaiian said revenue for cargo carried in the belly of its passenger aircraft declined nearly 30% in the second quarter versus the same period last year. The figure is on par with competitors in the face of a prolonged slump in cargo demand that has pushed freight rates down by almost 50% year over year.
Overall, Hawaiian narrowed its losses by $35 million to $12.3 million in the second quarter on a 2% bump in revenue. Executives said demand remains high with load factors from the U.S. mainland above 90% and a substantial pickup in travel from Japan since May.
The company is still hamstrung by Pratt & Whitney’s ongoing delays repairing engines and the lack of replacement units, which is keeping two to three Airbus A321 jets out of revenue service.
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