HONOLULU, Dec. 19 (UPI) -- Hawaiian Airlines and Aloha Airlines agreed to merge Wednesday in a move that will maintain service to the mainland and among the Hawaiian Islands, however the deal could result in some layoffs in the already-strapped 50th state.
The island state's two major airlines were rocked by the global economic downturn and a drop in tourism following Sept. 11, and decided to join forces in order to streamline their inter-island service that links Honolulu International Airport on Oahu with Maui, Kauai and other islands in the state.
"This merger is the best thing these two great airlines could do for the people and economy of Hawaii,'' said Greg Brenneman, the former president of Continental Airlines who will head up the newly merged company. "This state is dependent, like no other place in our country, on frequent, affordable, reliable local air service."
Inter-island flights out of Honolulu used to be the only way for tourists to get to islands other than Oahu, however more airlines have started flying directly from the mainland to Maui and other islands.
The merger will cut an estimated $90 million in operational costs, largely through the elimination of the inter-island competition between Hawaiian and Aloha. It will also, however, likely lead to job cuts and possibly higher ticket prices in a market where tourists already pay a considerably higher fare than local residents with Hawaii identification.
"Everyone has concerns about ticket prices going up," Gov. Ben Cayetano told the Honolulu Advertiser Wednesday. "But the reality is one airline will go under, so we would be left with one, anyway."
The merger combines the two airlines under the new holding company Aloha Holdings, Inc., with the stock shares divided among Aloha and Hawaiian shareholders and TurnWorks, a Texas investment firm Brenneman founded in 1994.
The combined airline will have an estimated $1 billion in annual revenue and, Brenneman pledged, would also be a presence in mainland and Pacific Rim destinations.
"Combining these two companies is something that makes sense now," opined Hawaiian Airlines Chairman John Adams. "The events of Sept. 11, the distressed economic climate, and the interest expressed by TurnWorks were the catalysts for taking this step."
The merger is expected to close early next year pending regulatory approval. Cayetano told the Advertiser the state would back the deal.
