Hawaiian Airlines' Triple Whammy: From Turmoil to Acquisition To Unknown

Hawaiian Airlines’ Triple Whammy: From Turmoil to Acquisition To Unknown

In 20-20 hindsight, Hawaiian appeared to be hoping and praying to be acquired. We believe that was true as the small carrier faced a trifecta of seemingly insurmountable problems, both across technical issues, the need for modernization and new planes, and a billion dollars in mounting debt it racked up over the past few years.

Then, the Alaska Airlines acquisition offer mysteriously arrived. We’ve heard somewhat differing answers as to how and when this came about, although the word remains that Alaska approached Hawaiian. It happened sometime in 2023, but when and how exactly isn’t clear.

One Sunday last month, we received an early morning email from Hawaiian advising us of the acquisition and inviting us to a Honolulu meet-up later that day where the heads of both companies would address what was happening.

Later, we learned from a Hawaiian SEC filing that they would be open to other offers. That could be necessary should the Alaska deal fall through for any reason. It isn’t clear, however, who another suitor would be.

We’ve long thought JetBlue might be such a contender, but that’s an unknown and unlikely possibility. In that SEC filing, Hawaiian told employees their answer to this question:

“Are you open to other offers? What if Alaska backs out of the deal?” (We) may consider other unsolicited offers for Hawaiian Airlines with the best interest of our shareholders in mind. However, we are focused on the agreement we reached with Alaska Airlines, which we believe is the best path forward for our company.”

Hawaiian Airlines’ response to employees.
Passengers Stranded Over 24 Hours On Two Hawaiian Flights

Hawaiian hasn’t recovered since Covid and other huge issues.

First, the airline has faced a huge decline in travel, of which the international component never returned in volume. While the domestic portion is back, it isn’t as strong as had been expected.

Next, the Hawaiian Air fleet of A321neo planes (18 total) developed severe engine problems that require long downtimes for each of the planes. That repair process is still ongoing. Hawaiian has become tight-lipped about the process that keeps some of the fleet on the ground at all times. We know that has been up to 5 planes at a time, but don’t know what the number is on a daily basis.

More in terms of planes, Hawaiian has an aged, cycle-heavy fleet of interisland planes that will also be coming up for replacement in the not-distant future. That change could easily cost more than a billion dollars to achieve when it comes.

Hawaiian Airlines Honolulu Airport Changes

In addition, Hawaiian moved to its new Amadeus reservation system in 2023, which did not go well. It created initial turmoil that threw their operations into disarray. Even many months later, features have never been restored, and we were told by CEO Peter Ingram that some planned features may not come to fruition prior to the planned Alaska Airlines acquisition.

Then the Maui fire hit and took Hawaii’s arguably most beloved island off of the travel map. That has remained the case, although Maui travel is clearly in recovery, albeit slowly.

Competition took another big toll on Hawaiian Airlines.

There’s no doubt that when Southwest Airlines sets its focus on any new destination, it causes the players in place to shudder. And that’s the case here, where Hawaiian had been the dominant airline in many ways. Not only has Southwest jumped effectively onto so many mainland routes that were Hawaiian’s bread and butter, but they also successfully took on interisland flights.

That was partly due to operational necessity. Southwest doesn’t have a dedicated fleet of interisland planes and flies its mainland-to-Hawaii aircraft around the islands before returning them ultimately back to the continent. It has proven effective for them in aircraft utilization and to move their passengers between islands since they do not cooperate with other airlines in that regard.

Not only has Southwest been a leader in discount pricing on their Hawaii routes, including interisland, but they also uniquely offer two free checked bags, which can be a multi-hundred dollar savings for a family traveling to Hawaii. The result has been difficult pricing pressure on Hawaiian, giving them few safe places to turn to.

How bad are the finances at Hawaiian Airlines?

Clearly, things haven’t been good for some time. One analyst compared Hawaiian to Spirit, only worse, saying, “Relative to Spirit, Hawaiian has a weaker financial profile, including credit and profitability metrics.” The airline is poised for a multi-hundreds of millions loss again in 2024. In addition, it faces more than a billion dollars of debt refinancing that will need to be resolved before it comes due in 2026.

Mixed and mitigating news at the Hawaii bellwether.

In spite of these losses, there has been a general improvement in Hawaii travel since the Lahaina fire that spooked the entire Hawaii travel industry following the Lieutenant Governor evacuating all of Maui’s tourists in the days after the fire while the governor was in Japan.

Not only that, but Hawaiian has begun a new and lucrative job flying and maintaining a fleet of A330-300 aircraft on behalf of Amazon Prime Air. That operation is not, however, based in Hawaii.

Hawaiian is also fortunate to operate a highly reliable fleet of customer-friendly A330-200 planes that, while aging, are the undisputed workhorse for the airline. It will take a few years for Hawaiian to start moving significant traffic away from the A330 via the drip of slowly arriving Boeing 787 Dreamliners. But when those come, it will bring the beginning of a new fleet era to the company, the likes of which it hasn’t seen in years. Then, in two years’ time, the airline will have another round of short-term A330 leases terminating, which will signal that another decision on aircraft is imminent.

Alaska Airlines to the rescue?

Alaska realizes that Hawaiian, and its typically lucrative tropical leisure destination market, hold much promise that the savvy Seattle company believes it can extract. It expects to be the market leader in Hawaii and its CEO stated at the Honolulu meeting at which we spoke with him that Honolulu will definitely be Alaska’s second-largest hub. Depending on a myriad of factors, Hawaii could someday even become Alaska’s top-performing hub.

Alaska will acquire much good and much not-so-good with Hawaiian Airlines.

They are undoubtedly looking forward to being a widebody carrier, with all the opportunities and challenges that entails and returning to a mixed fleet operation. That comes after Alaska just returned to operating an all-Boeing 737 fleet following disposal of the A321neo fleet that arrived when it acquired Virgin America.

Could Hawaiian’s primary mainland plane change to become 737 MAX?

It isn’t clear that Alaska would retain all of Hawaiian’s widebody capacity in and for Hawaii. They may choose instead to move some or most of that to the mainland, replacing many Hawaiian flights with Alaska’s preferred 737 MAX strategic solution. For sure, there is a lot to be worked out in each of the many areas of this proposed acquisition.

What do you think the result will be in the future of Hawaiian Airlines?

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28 thoughts on “Hawaiian Airlines’ Triple Whammy: From Turmoil to Acquisition To Unknown”

  1. 2/2
    the more business opportunities arise for them (yes deep sea exploration would be huge too).

    Either option will be painful for Hawaii. Embrace the suck or embrace a different kind of suck. Sad but true. Either innovate or go back in time. I don’t see any other options.

  2. 1/2
    I feel bad for Hawaiian Airlines. Their entire business relies on tourism. Sadly, during COVID-19, the state of Hawaii was in a balancing act. Should the State of Hawaii promote tourism at the expense of limited hospital logistics and medical availability?

    This is the crux of the problem. Hawaii has limited land space, yet they have a very demanding tourism fan base and their politics can be polarizing. I would say that Hawaii must expand their medical facilities and expertise in order to continue “business as usual”. Otherwise, they need to undergo an entire see change of what it means to be Hawaii. Also it wouldn’t be a bad idea for Hawaii to embrace the TMT and NASA as a whole. The more Hawaii embraces STEM,

  3. HA service for the most part is superb. Have traveled HA exclusively for 15 years. Hope they can maintain
    Aloha Spirit after merger.

  4. The employees have been blind-sided….One thing I believe Hawaiian Airlines has not done is to talk to its union and All of its employees. Solutions often come from the people in the pits that do all the heavy lifting namely employees.

    It takes dozens of employees to get one plane off the ground and it seems like the employees would be able to troubleshoot and come up with realistic solutions rather than leaving Hawaii.

  5. I am a Alaska Airlines MVP Gold member. I very much look forward to the merger of Alaska and Hawaiian Airlines because as soon as it happens I plan to fly to many of the Hawaiian Airlines destinations in the Pacific

  6. Ask mark (dunkerly) if he would be willing to come back and help. When Hawaiian was facing hard times in the past, wasn’t it mark who came on board and brought the company out of bankruptcy ? And from then on to the day he left, Hawaiian had a good record?

  7. How often will Alaskan air lines pick up in Vancouver as air Canada has bumped us around? Do not like air Canada’s treatment of passengers. Went west jet the last time and was great but getting a better deal with air Canada was not what they said.

  8. Monique M
    Hi, we’ve always preferred flying HA and have never had any complaints. Friendly, good service, a meal served with the purchase of your ticket and the lowest prices. We were disappointed to hear that they were having trouble. Now we are wondering whether to still purchase a ticket to fly HA since they are still showing flights for sale. With the possible transition to Alaska not sure if we would have issues when the time came to fly. Any suggestions would be greatly appreciated. Thank you

  9. I have flown Hawaiian Airlines many times and they are truly one of the best U.S. air carriers.Their inflight service is top notch and their on time take off & arrival record is better than most mainland carriers.It would break my heart to see this huge employer to the people of Hawaii go away.I pray things turn around.I did not realize Hawaiian Airlines was in so much financial hardship.

  10. Been flying Hawaiian to and around the islands for decades. Even as a AA and UA million miler.
    HA has great in-flight service and a historic legacy in Hawaii. But loyalty is not permanent. If the Alaska merger removes the wide bodies from the mainland/Hawaii routes then I will return to AA and UA. Don’t want to but will. Hey Hawaiian management, why don’t you advertise or promote your service from Austin??? Most people in Central and South Texas aren’t aware of it. When I tell others they are shocked to find out.

  11. Not sure if they were facing Chapter 11 or not, but one more unexpected speedbump surely would be dangerous for them. The synergies of Alaska and Hawaiian seem too good to pass up. Combining the strengths of arguably the two preferred carriers to Hawaii into one is huge. The HA brand and deep pacific roots combined with Alaska’s outstanding IT and operational expertise will create an airline with tremendous potential to grow in the Pacific Rim. Mergers are a slippery slope but so far this one appears to be one were the sum will be greater than the parts.

  12. Great take. HA forgot there are many ways to get to the islands. We were loyal customers. We loved the vibe from the moment you stepped on the aircraft; loved the spirit of the crew members and their announcements; even the videos we saw were tailor made to kick-start a trip to the islands. Heck, the food was pleasingly “different.” And we didn’t mind paying a little premium for the experience. But the price kept going up and the quality down. We were off to other airlines by the time Amadeus struck. We have no real loyalty other than to whichever airline can provide the best travel dates and perks. We will no doubt look at HA again down the road when the merger dust settles. I can’t wait for a BOH travel report on the “new” HA.

  13. If Alaska were to replace the fleet with the 737 Max aircraft, I would no longer fly that airline. I would go to another carrier. the 737 Max is a deathtrap.

    1. That’s odd. Pilots refer to the alternative as the “scarebuss”.
      My commerical airline mechanic says Boeing are better planes.

    2. Aloha Andy!

      Can you provide statistics and facts to support your statement? If it is the death trap you claim, there should be data to support that and I would like to see it before deciding on whether or not to fly a 737 MAX.


  14. We really enjoy your insights and opinions on Hawaii and travel. Thanks for what you do. I have gotten several friends onto your blog/newsletter as well. Aloha!

  15. Aloha,

    Let’s be honest, the entire experience from booking, changing, canceling, credit back for points or cash and Southwest tracking all of that both on the web and more importantly from the app is alone a game changer in experience. HA continues to forget it’s bread and butter, with mainland tourism. Interisland might keep the lights on, but the horrible, preventable experience with their upgrade pushed a lot of mainlanders to Alaska, Southwest and United just to avoid HA. Peter missed the message and dropped the ball on where to be spending the money and time. That was – and is, still Amadeus. Who’s accountable?

    1. In Los Angeles, the awful hike to the gates pushed many including myself and my husband to other airlines as well as their terrible reservation system which has never come up to speed since the “upgrade”.

    2. Clearly, switching to Amadeus at the critical time they did, Peter got poor advice from his IT team or external consultants. Replacing the core engine of any enterprise IT solution is akin to heart surgery. So many things can go wrong. Hawaiian Telco tried something similar when they took over Verizon and it was a disaster. So there was precedence in Hawaii, just not in the aviation field.

    3. Agreed ! My last 2 flights with HA were a mess! I chose my seats & they moved me 2 times up to flight take off…they made like 5 announcements to “take your carry-on luggage” to check-on…I offered mine but they would not move me to another better seat “because you have an economy paid seat” = I kept my carry-on luggage with me. My son just flew LAX to Maui on Southwest who is at Gate One at LAX- Woo Hoo! Easy peazy pumpkin easy check-in, boarding etc.. & he got to check in a piece of luggage for Free! Yay Southwest !

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