United Airlines is sounding the alarm about competitors’ plans

Earlier this month, Alaska Airlines (ALK) and Hawaiian Airlines has cleared what many see as a major hurdle to a takeover valued at $1.9 billion, or $18 per share.

While a federal judge blocked a similar proposal for JetBlue (JBLU) to acquire Spirit Airlines (SAVE) Due to antitrust concerns in February, the Alaska-Hawaii merger was approved by the Department of Justice on August 20 and is currently under review by the Department of Transportation (DOT). Shares of both companies have been on an upward trajectory amid what many see as increasing chances that the merger could go ahead.

Here’s the latest on the proposed merger

The biggest difference between the failed JetBlue-Spirit merger is that both airlines serve very specific populations outside the continental US (or those who travel there for vacations) and cannot monopolize the market and control ticket prices in the same way that a merger of two companies with reduced price. airlines that cost.

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That said, United Airlines (WELL) is already expressing concern about what such a merger could mean for it.

According to travel and aviation website Skift, United’s chief legal officer, Robert Rivkin, sent a letter expressing his concerns to DOT Deputy General Counsel Brian Stansbury.

“United has interline, codeshare, pricing strategy and loyalty agreements with Hawaiian,” the letter said. “The memo did not go into further detail about United’s concerns.”

United operates a number of flights to airports in the Hawaiian Islands and likely sees a Hawaiian Airlines revived with Alaska funds as having the potential to significantly chip away at its business. None of the three airlines have commented publicly on the news break surrounding Rivkin’s letter.

Hawaiian, which has reported a string of unprofitable quarters and lost a total of $260 million in 2023, is in desperate need of a turnaround plan.

Even with the post-pandemic takeover, the drop in Japanese travelers to Hawaii during the pandemic was too big a blow to recover financially. With a deal approved, Alaska would assume about $900 million of Hawaiian’s debt and pump its own resources into growing its customer base that travels to the islands.

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Alaska Airlines explains its future plans

“We continue to believe this combination will enable a stronger platform for growth and competition in the United States, long-term employment opportunities for employees, and continued investment in local communities and environmental stewardship,” Alaska Airlines said of the proposed merger earlier this year. year. .

Alaska also said that even after acquiring Hawaiian, it would continue to operate the airline under its own name, as opposed to killing off the brand, as is more common with such mergers (travelers who fly Hawaiian like to see brands with lion flowers rather than ice caps) and the creation of a merged loyalty program between the two airlines.

“The merger will greatly expand the number of North American destinations for Hawaii residents that can be reached non-stop or with one stopover from the islands, and HawaiianMiles members will retain the value of their miles while gaining access to more many destinations around the world.” Hawaii Governor Josh Green, who threw his full support behind the merger, said in his own statement.

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