Alaska Air, Hawaiian deal: CEOs explain why it's a 'win-win'

Alaska Air Group (ALK) is buying Hawaiian Holdings (HA) in a $1.9 billion deal.

Alaska Airlines CEO Ben Minicucci and Hawaiian Airlines CEO Peter Ingram join Yahoo Finance Live to discuss the merger and its impact on customers.

Minicucci said the merger “provides so much opportunity” for both employees and customers, adding the two brands will remain separate as part of a “dual-brand strategy.”

While the deal faces potential regulatory scrutiny, both Minicucci and Ingram are confident the agreement will get approved.

Ingram tells Yahoo Finance the deal is 'pro-consumer' and will 'add competition for the big four network carriers.'

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

- Ben, let's talk a little bit more about that, the fact that you think it's going to be a great journey here. Why does this make sense for Alaska Airlines?

BEN MINICUCCI: Well, you know, first, we have such huge respect and admiration for what Hawaiian Airlines has built over their 90-plus year history. And if you look at Alaska and what we've built on the west coast and in the state of Alaska, these two networks complement each other so, so well. And so when we look at the entire Hawaiian market, this is an $8-billion market. We will be the clear market leader in Honolulu and the state of Hawaii. So this makes this very attractive.

And if you look at the deal in terms of valuation, this will be EPS and work accretive in the first two years after deal closed. And the other thing, it provides so much opportunity for employees and choice for customers. Our West Coast customers will have an expanded domestic and international platform. A resident in Hawaii will have more choice to fly, three times more choices to fly in the continental US. So I think there's just a win-win here across the board.

- Ben, first and foremost, I got to get my hands on one of these shirts that you fellas got there. Very snazzy. Number two, when we think about ultimately some of the synergies that you're talking about here, it's in the form of people. It's in the form of aircrafts. And ultimately for customers too, making sure that they've got a seamless experience. What does success look like first 90 days after this deal goes through?

BEN MINICUCCI: You know, one of the biggest things we have to do well and we're doing something a little unique, Brad, than other mergers is that we're going to keep the brand separate. And this is just because of the phenomenal legacy that Hawaiian Airlines has here in the islands. And so we made the decision early on that we would have a dual brand strategy.

So one of the things that we have to really do well here in the months to come and after the deal closes is to make sure that when we execute, that it is seamless for customers on the dual brand strategy, and it'll be a dual brand, customer-facing, but it will be a single platform in the back so and with a single loyalty program.

So kind of like what other industries do. For example, the hotel industry, you'll have the Marriott Bonvoy Loyalty Program. But they have their house of brands, different hotels underneath. So that's one of the things that we really need to do well executing out of the gates.

- Peter, one of the topics here this morning is the regulators. The regulatory hurdle that could potentially be ahead of you. I know you two are very confident that this deal will get done. Why? Why is that different than some of the pushback that we've seen amongst consolidation within the industry?

PETER INGRAM: Well, Ben talked earlier about how the networks are very complementary. There's really not a lot of overlap in our two networks. A big part of what we do is flying internationally in the Asia-Pacific region and our neighbor island network. And Alaska doesn't participate in that at all, so there's really no competition concerns.

And even in North America, there's a lot of competition on those routes. There will continue to be a lot of competition on those routes. We only have a dozen overlap routes in total out of about 1,400 flights for the combined carrier. So I think when the regulators look at this deal on its own merits, they'll see that it's pro-consumer, pro-competitive, and we're going to add competition for the big four network carriers that are far larger than the combined company will be even after the merger.