Alaska closes $1.9 billion acquisition of Hawaiian Airlines after DOT blessing – CNBC

SOURCE: Michele Luhn and Leslie Josephs | CNBC

Alaska Airlines closed its $1.9 billion acquisition of Hawaiian Airlines, the companies said Wednesday, a day after the U.S. Department of Transportation blessed the deal on the condition that the carriers maintain the value of their frequently flyer programs and preserve several key routes.

The carriers’ merger agreement cleared the U.S. Justice Department’s review last month. That put it in the hands of the Transportation Department, which must also review airline mergers.

The DOT said the airlines must ensure that miles earned in the HawaiianMiles and Alaska Mileage Plan programs before the creation of a new, combined loyalty point system will not expire and that they can transfer at a 1-to-1 ratio.

They also must preserve “essential air support” for rural areas and maintain current levels of service for passenger and cargo routes between the Hawaiian islands, U.S. Secretary of Transportation Pete Buttigieg said on a press call.

“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,” Buttigieg said in a news release. The agency said the protections will be in place for six years.

The Department of Transportation noted that the airlines can close the deal, but still need approval for a transfer application, which allows them to combine and operate international routes under one certificate.

After the DOT’s announcement, Alaska said it would appoint an interim transition team to oversee the combination of the two companies as they seek a single operating certificate from the Federal Aviation Administration. Joe Sprague — who is currently Alaska Airlines regional president overseeing Hawaii — will be appointed CEO of Hawaiian Airlines once the transaction is closed until the FAA process is finished, the company said.

Another airline deal failed earlier this year. A federal judge in January blocked JetBlue’s nearly $4 billion purchase of budget carrier Spirit Airlines on antitrust grounds, a win for the Justice Department, which challenged the deal.

Alaska and Hawaiian said in December when they announced plans to combine that they would keep each carrier’s brand but operate under a single platform, combining into a more than 360-airplane fleet offering over 130 destinations.

Hawaiian must also adopt Alaska’s practices of guaranteeing family seating without an additional fee and providing compensation if the airline causes significant flight delays or cancellations, the DOT said.

This article was originally published on CNBC – navigate to the original article here.