Alaska Airlines to fly Amazon packages after completing Hawaiian buy

A blue-tailed Alaska Air Cargo jet takes off, viewed from the rear.

Alaska Airways operates three Boeing 737-700 transformed freighters (pictured) and can add 10 Airbus A330 cargo jets when it completes the acquisition of Hawaiian Airways. (Picture: Alaska Airways)

Alaska Air will take over cargo transportation for e-commerce large Amazon when it concludes a deal introduced Sunday to accumulate Hawaiian Airways in a stock-and-debt transaction value $1.9 billion. Whether or not the Amazon transportation companies settlement is ultimately modified is unclear, however Alaska’s CEO mentioned it might spur additional funding in freighters.

“For now, nothing adjustments,” mentioned Hawaiian Airways spokesman Alex Da Silva in an electronic mail.

Hawaiian Airways (NASDAQ: HA) in early October started flying an Airbus A330-300 transformed freighter between Amazon’s air logistics superhub at Cincinnati/Northern Kentucky Worldwide Airport and its West Coast hub in San Bernardino, California. Below a contract inked late final yr, Amazon (NASDAQ: AMZN) plans to lease 9 extra of the previous passenger planes which might be being overhauled to hold cargo containers and switch them over to Hawaiian to function on its behalf within the home U.S. market.

The dad or mum firm of Alaska Airways (NYSE: ALK) presumably contemplated that Amazon has warrants to take a 15% fairness stake in Hawaiian Airways after 9 years conditioned on assembly a spending threshold of $1.8 billion.

Working freighters for the primary time in a partnership with Amazon is a method for Hawaiian to diversify its enterprise.

Alaska Airways has lengthy operated a small fleet of freighter plane, primarily between Alaska and the continental United States. It at present has 4 transformed freighters — three Boeing 737-700s and one 737-800 it obtained final month. Boeing is scheduled to ship a second 737-800 passenger-to-freighter plane early subsequent yr. However the A330, a medium widebody plane, is way bigger than the 737 and would convey Alaska’s freighter fleet to fifteen plane by early 2025.

“We will probably be carefully assessing whether or not additional devoted freight or flying for ourselves or in an asset mild mannequin for others might make sense for the mixed firm over time,” mentioned Alaska Air CEO Ben Minicucci on a convention name with analysts.

“We haven’t had a ton of dialog with Amazon,” he added. “We’re anxious to know that extra. We’re the one passenger provider within the U.S. business that has devoted freighter flying at present, eradicating from three plane of 5. I believe it’s an space of potential long term alternative for the corporate. And we’ll proceed to observe to see if that kind of flying makes extra sense if there’s extra of it.”

The Amazon partnership additionally offers Alaska Airways a Midwest pilot base and extra alternatives for pilots to fly widebody plane, which provide extra profitable pay.

“Alaska has a robust monitor document of working a superb freighter community and can be an airline identified for sturdy operational reliability. Nevertheless, the manager group at Hawaiian was sturdy supporters of the Amazon deal. A lot of these leaders could not survive the merger, so Alaska executives might want to show their dedication to Amazon for the long term,” Derek Lossing, the founding father of Cirrus International Advisors and former Amazon Logistics government, instructed FreightWaves.

Executives mentioned on a name with traders that they count on the deal to supply $20 million in redundant financial savings from cargo operations related to their respective passenger airways, which carry cargo within the decrease maintain as an adjunct enterprise, and probably unlock additional progress.

Greater is best

The rationale for merging Alaska Airways and Hawaiian Airways stems from the truth that they’re mid-tier carriers in a aggressive U.S. airline market the place scale more and more issues. Additionally, Hawaiian has routes to Asia that give Alaska Airways entry to its first main worldwide presence, past restricted flights to Mexico and Central America.

Alaska Airways already flies to Hawaii however will provide expanded service there and depend Honolulu as a significant hub.

The businesses mentioned they may keep their current manufacturers, with a mixed fleet of 365 plane. The Alaska and Hawaiian networks are extremely complementary, with solely a 3% overlap. Alaska operates an all-Boeing narrowbody fleet whereas Hawaiian has a blended fleet that features 24 A330s and 18 Airbus A321neos.

Alaska seems to have obtained a superb worth for its cash, with the deal value lower than Hawaiian’s annual income and a price-to-earnings ratio of 4.

In the course of the first three quarters of 2023, Alaska Airways generated $10.4 billion in income in comparison with $2.8 billion for Hawaiian.

The transaction is predicted to shut in 12 to 18 months, pending approval by Hawaiian shareholders and antitrust regulators.

Click on right here for extra FreightWaves/American Shipper articles by Eric Kulisch.

Contact Reporter: ekulisch@freightwaves.com 

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Hawaiian Airways welcomes new Amazon income stream 

Hawaiian Airways preps for October begin of Amazon cargo service

The submit Alaska Airways to fly Amazon packages after finishing Hawaiian purchase appeared first on FreightWaves.

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