By David Shepardson
(Reuters) -Alaska Airlines said on Wednesday it had completed its $1.9 billion acquisition of Hawaiian Airlines after reaching an agreement with the U.S. Department of Transportation.
The airlines on Tuesday agreed to maintain key Hawaiian routes and adopt consumer protections under an agreement that will last six years.
The Justice Department in August chose not to block the deal that was announced in December by Alaska, the fifth-largest domestic U.S. airline, to merge with Hawaiian, the 10th-largest carrier.
Alaska CEO Ben Minicucci said in an interview that the deal would be good for competition and consumers and would expand access for consumers to both networks and give Alaska access to Hawaiian's fleet of wide-body airplanes.
"It's just a few more arrows in our quiver on how we deploy airplanes across our entire network," Minicucci said. "Putting the right airplane in the right market to deliver the best results for the combined entity."
Minicucci said the airline expects to deliver at least $235 million in run-rate synergies by year three.
The Justice Department has been aggressive under President Joe Biden in blocking airline consolidation. In March, JetBlue Airways (NASDAQ:JBLU) and Spirit Airlines (NYSE:SAVE) scrapped their $3.8 billion merger agreement after a U.S. judge blocked the deal in January on anticompetition concerns following a Justice Department lawsuit.
The agency also successfully challenged a joint venture that American and JetBlue entered into in 2020, called the "Northeast Alliance," for flights in and out of New York City and Boston.
The Transportation Department said Alaska and Hawaiian agreed to protect the value of frequent flyer rewards, maintain existing service on key Hawaiian routes to the continental United States and inter-island regions, ensure competitive access at the Honolulu airport and provide travel credits or frequent flyer miles for disruptions that are the fault of the airline.
Hawaiian Airlines’ stock will be de-listed and will cease trading on the Nasdaq on Wednesday, Alaska said in a statement. The combined organization will continue to trade under the ALK ticker symbol on the New York Stock Exchange.