Hawaiian Airlines to get new leadership after merger closes with Alaska

UPDATE: 11 a.m.

Alaska Air Group, the parent company of Alaska Airlines, announced today that Hawaiian Airlines President and CEO Peter Ingram will step down immediately following the completion of its $1.9 billion transaction with Hawaiian Airlines and an interim Honolulu leadership team will guide the closing of the merger.

Joe Sprague, Alaska Airlines’ current regional president of Hawaii/Pacific, will be named the new Hawaiian Airlines CEO and will lead the interim leadership team overseeing Hawaiian’s operations while Alaska pursues a single-operating certificate.

Until then, the airlines will operate as one organization with two separate airline operations, under two individual operating certificates. After the certificate is granted, the airlines will function as a single operation with two public-facing brands, Hawaiian Airlines and Alaska Airlines.

Sprague will oversee all aspects of Hawaiian Airlines’ operations until the FAA finalizes Alaska’s request for a single operating certificate — a process made possible by the U.S. Department of Transportation’s approval of the airlines’ application to combine and operate international routes under one certificate.

Sprague said in a statement, “We have a unique, once-in-a-generation opportunity to combine two incredible companies with aligned values and 90-plus year legacies of serving and connecting local communities. I am deeply honored to work alongside these strong leaders from Hawaiian Airlines to lead the airline’s people, operations, and brand through this transition while sustaining our commitments to safety and service.”

Some other key members of the Hawaiian’s interim Honolulu leadership team include:

>> Shannon Okinaka, executive vice president, administration

>> Robin Kobayashi, senior vice president, human resources

>> Jim Landers, senior vice president of technical operations (maintenance and engineering, flight operations and system operations control center)

>> Lokesh Amaranayaka, vice president, airport operations and in-flight

>> Terry Hill, managing director, safety

>> Alisa Onishi, director of brand and culture

>> Daniel Chun, regional vice president of Hawaii for Alaska Airlines

Hawaiian’s operations leaders Bob Johnson, vice president of flight operations, Beau Tatsumura, vice president of maintenance and engineering, and Tom Zheng, vice president of technical operations business planning and services during this period will continue to report to Jim Landers, Hawaiian’s vice president of maintenance and engineering. Justin Doane, Hawaiian’s vice president of labor and people relations, will continue to support Hawaiian labor relations.

EARLIER COVERAGE

A proposed $1.9 billion merger between competitors Alaska and Hawaiian airlines has cleared its final hurdle with the U.S. Department of Transportation today announcing that it was granting approval for the airlines to combine and operate international routes under one certificate – authorization required to provide air transportation as a merged carrier.

The clearance, which includes protections for travelers, comes about a month after the U.S. Justice Department ended its formal review period for the proposed merger under the Hart-Scott-Rodino Act.The DOJ enforces Section 7 of the Clayton Act, which prohibits mergers and acquisitions that could substantially lessen competition or create a monopoly.

However, if the DOT had denied the joint application that Alaska and Hawaiian made on July 15, the airlines could not have combined.

When the DOT announced that the merger was moving forward today, it said in a statement that it had secured “binding, enforceable public-interest protections from Alaska Airlines and Hawaiian Airlines prior to the close of their merger. The protections, necessary for the Department’s consideration of the airlines’ needed approvals, are aimed at preventing harms to the traveling public, rural communities, and smaller airline competitors.”

The DOT added that, “Alaska and Hawaiian are required to protect the value of rewards, maintain existing service on key Hawaiian routes to the continental United States and inter-island, preserve support for rural service, ensure competitive access at the Honolulu hub airport, guarantee fee-free family seating and alternative compensation for controllable disruptions, and lower costs for military families.”

U.S. Transportation Secretary Pete Buttigieg said in a statement,”Our top priority is protecting the traveling public’s interest in this merger. We have secured binding protections that maintain critical flight services for communities, ensure smaller airlines can access the Honolulu hub airport, lower costs for families and service members, and preserve the value of rewards miles against devaluation,” said “This more proactive approach to merger review marks a new chapter of DOT’s work to stand up for passengers and promote a fairer aviation sector in America.”

Key protections include, according to the DOT include:

>> No expiration for HawaiianMiles miles and Alaska Mileage Plan miles earned prior to conversion into the new combined loyalty program.

>> Rewards members can transfer HawaiianMiles miles to and from Alaska Mileage Plan miles at a 1:1 ratio prior to the launch of the new combined loyalty program.

>> Under the new combined loyalty program, the combined airline must match and maintain the equivalent status levels that HawaiianMiles members hold under the HawaiianMiles program, match and maintain status levels and conferred benefits that are equivalent to Alaska’s Mileage Plan program.

>> The combined airline must not impose change or cancellation fees on rewards redemption tickets for travel on carrier-operated flights.

>> The combined airline must maintain robust levels of service for critical Hawaiian inter-island passenger and cargo service and for the key routes between Hawaii and the continental United States at risk of a loss of competition.

>> The combined airline must preserve its support for Essential Air Service in Alaska’s and Hawaii’s small, rural communities where such service is a lifeline to health care, education, and economic well-being.

>> Both airlines will update their customer service plans to provide at least one free standard carry-on and at least two free standard checked bags for service members and their accompanying spouse and children. They will also waive change fees for service members and their families who reschedule flights due to a military order or directive.

Hawaiian and Alaska are expected to soon complete the merger, which was approved on Dec. 2 by the boards of directors of both air carriers. The process, which has included lawsuits and high-level federal and state reviews, so far has taken about nine months.

Hawaiian shareholders, who approved the merger on Feb. 16, will get $18 a share in cash as part of the deal, which includes $900 million in Hawaiian debt. Hawaiian’s stock this morning was very near that price, an indication to some that investors had confidence that the deal would go through.

The deal is expected to shore up Hawaiian’s financial performance, which has been strained since at least COVID-19. Hawaiian reported a second-quarter net loss of $1.30 a share, or $67.6 million, as compared with a $12.3 million net loss a year ago. When adjusted for nonrecurring costs, the second-­quarter loss came to $1.37 a share.

After it completes the financial terms of the deal, Alaska Air Group Inc., the parent company of Alaska Airlines, will also commonly own and control Hawaiian. It’s still unclear how the merger will impact Hawaiian’s 7,400 employees. Union members are expected to keep their jobs, however, it’s anticipated that the carrier’s top leadership team will undergo change.

The DOT’s approval of the airlines’ joint application means that the carriers may move forward on combining under a single FAA operating certificate.

In their application, the airlines said that they planned to keep “both the Alaska and Hawaiian brands, retaining consumer choice while offering integrated and seamless loyalty benefits and customer service.”

Hawaiian Airlines has a history that goes back to 1929. It is the state’s largest carrier, with about 150 daily interisland flights and over 230 systemwide. It offers nonstop flights between Hawaii and 16 U.S. gateway cities, as well as service to American Samoa, Australia, the Cook Islands, Japan, New Zealand, South Korea and Tahiti.

Alaska Airlines and its regional partners serve over 120 destinations across the U.S., Belize, Canada, Costa Rica, Mexico, the Bahamas and Guatemala.

Completion of the merger is expected to happen quickly, and once it does, the combined airlines, “will serve 54.7 million passengers annually and operate to 138 destinations, including nonstop service to 29 top international destinations in the Americas, Asia, Australia, and the South Pacific,” according to their joint application agreement.