HONOLULU — Alaska Air Group, Inc. and Hawaiian Holdings, Inc. announced an agreement on Sunday in which Alaska Airlines will acquire Hawaiian Airlines for $18 per share in cash for a transaction value of approximately $1.9 billion, according to a joint news release. However, the deal could potentially put it on track for a clash with a Biden administration wary of higher airfares.

The combined company expands the fifth largest U.S. airline to a fleet of 365 narrow and wide-body airplanes, providing customers with access to 138 destinations through the combined network and over 1,200 destinations through the oneworld Alliance.

Honolulu will be the key hub for the combined airline, providing customers with expanded service for Hawaii residents to the continental U.S. and U.S. travelers with new connections to Asia and throughout the Pacific.

“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 Hawaii travelers,” said Ben Minicucci, Alaska Airlines CEO in the release. “We have a longstanding and deep respect for Hawaiian Airlines, for their role as a top employer in Hawaii, 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-plus 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 Hawaii for over 16 years, and we are fully committed to investing in the communities of Hawaii 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.”

Minicucci told reporters at a news conference Sunday that it's “too soon to tell” how many non-union positions would be eliminated once the combination is completed.

“I can’t tell you what that number is, but I’m hopeful that the number is not large,” he said of the potential layoffs.

Hawaiian Airlines President and CEO Peter Ingram stated, “Since 1929, Hawaiian Airlines has been an integral part of life in Hawaii, and together with Alaska Airlines we will be able to deliver more for our guests, employees and the communities that we serve.

“In Alaska Airlines, we are joining an airline that has long served Hawaii, 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.”

Alaska Airlines and Hawaiian Airlines will maintain their individual brands while integrating into a single operating platform.

U.S. Rep. Ed Case, D-Hawaii, released the following statement after Sunday’s announcement:

“My earliest memories include flying with my dad on Hawaiian Airlines from Hilo to the Big City. So, like all of us it is difficult to accept that this truly kamaaina company, such a deep part of the lives of generations of residents and visitors, may not continue as an independent and uniquely Hawaiian enterprise. But if this is going to and needs to happen to maintain Hawaiian’s contributions to our state, Alaska Airlines is a promising partner,” said Case.

“Its undertakings to continue the Hawaiian brand, employ the over 7,000 Hawaii ohana that have served us so well, and sustain reliable, affordable and competitive interisland and Hawaii-outside world service are very welcome.

“What matters, though, is that there are full, binding and transparent commitments to back up those words. That must be our focus in the upcoming federal and state review and approval processes and community discussions of this major change in our Hawaii fabric.”

Customers will be able to choose among various price points with greater selection between Alaska Airlines’ high-value, low-fare options and Hawaiian Airlines’ international and long-haul flights.

Hawaiian Airlines customers in the loyalty program will experience enhanced benefits through the combine airline including the ability to earn and redeem miles on 29 global partners and receive elite benefits via oneworld Alliance airlines, expanded global lounge access and benefits of the combined program’s co-brand credit card.

The deal has been approved by the boards of both companies, but it still needs an OK from the shareholders of Hawaiian Holdings. It will also need the blessing of U.S. regulators, which have resisted more airline consolidation out of fear it could lead to higher fares.

The Biden administration is already trying to block JetBlue’s proposed $3.8 billion acquisition of Sprit Airlines, which would subsume the nation’s biggest budget carrier. The Justice Department also won a lawsuit that killed a partnership between JetBlue and American Airlines.

The average domestic airline fare out of Seattle during the spring was $409.93. That was up from $293.08 two years earlier, according to data from the U.S. Department of Transportation. The average domestic fare out of Honolulu during the spring was $367.94, up from $329.93 two years earlier.

But given how little Alaska and Hawaiian's routes overlap, their proposal may not create much angst in Washington, said Henry Harteveldt, a travel industry analyst at Atmosphere Research Group.

Just as importantly, he said, neither Alaska nor Hawaiian is an ultra-low fare airline like Spirit. That means combining them would not eliminate the kind of downward pressure on fares that a Spirit buyout might.

The airlines will need to work with their unions as they try to streamline operations, and corporate officials said they have spoken with collective bargaining leaders already. The Air Line Pilots Association said Sunday they were evaluating the proposal and awaiting more details.

Both airlines have historically paid more attention to their employees than competitors, among other similarities in their corporate cultures, Harteveldt said. It's another reason he said he thinks a merger between the two could work.

Alaska Airlines and its regional partners serve over 120 destinations across the U.S., Belize, Canada, Costa Rica and Mexico, with new service to the Bahamas and Guatemala beginning in December.

Now in its 95th year of service, Hawaiian Airlines is the state’s largest and longest-serving airline, offering nearly 150 daily flights within the Hawaiian Island and non-stop flights between Hawaii and 15 U.S. gateway cities — more than any other airline — in addition to connecting Honolulu with American Samoa, Australia, Cook Islands, Japan, New Zealand, South Korea and Tahiti.

EDITOR’S NOTE: The article has been updated with new reaction. The Associated Press contributed to this story. (Dec. 4, 2023)