AWA/HA future merger??

Columbia blue

Aug 20, 2002
Interesting subject presented by Motnot on another board...with apologies to him I decided to(ahem)..borrow it for this board. Keep in mind this is just discussion motnot said at the end of his post "Just thinking out loud".
The future of HA
I see three options. They can go out of business, try again to merge with Aloha, or sell to a bigger airline.
It seems unlikely that such as Democratic-leaning state would allow HA to fail, given the dire effects that would have on jobs and tourism and the state economy. Hoping for politicians to save you isn't smart, but so far HA management doesn't seem too smart.
Trying to merge with Aloha again would require a huge swallowing of pride, and who's to say that Aloha would want them back? Why not just let your enemy die and then step over their carcass to profits?
I don't think any of the big airlines would want HA. Hawaii service is far from a moneymaker; most airlines are lucky to break even on it. And you just couldn't service HA's routes with big-airline labor costs.
The only major airline that could pull it off, in terms of labor costs, would be AWA. If HA's losses got down to $10 million a quarter through the Aloha antitrust exemption, I would think AWA could squeeze that much savings out of a combination.
That's still not to say that AWA would be interested. But they just might, since Hawaii's going to be a big draw for AWA fliers all across the country. If you can get that on the cheap with little or no negative impact on profitability, then why not?
My prediction has been that the AWA-HA codeshare starts up in October as planned, is a big success, and then a second PHX-HNL flight is added soon. I'm sticking to that.
So then here's a scenario: AWA reaches a deal with ALPA around the end of the year or beginning of next year. HA continues to struggle.
America West Holdings acquires HA and runs it sorta under a separate name as AMR did with TWA, in order to keep HA crews on HA routes on the 717s and 767s and, most importantly, pay them according to their current contract until a reasonable AWA-wide contract for 717 and 767 flying is worked out within the unit cost restrictions of the ATSB deal. That allows for a full integration, and of course for AWA veteran pilots and FAs into the widebodies and to have layovers in the islands.
And just think what the Leisure Co. (AWA Vacations) could do with Hawaii..
First, I appreciate your giving me credit for the post, although I may not appreciate it as much if folks start ridiculing the idea! (Not that I'm really even suggesting it, just examining it.)

Just to give this a little context for folks who aren't familiar with HA's situation, HA last week announced its Q2 results, it was a loss of roughly $30 million on revenue of about $150 million. Obviously not good. Q1 was a loss of about $18 million.

The bad part for HA is that management just did a shortsighted stock buyback, and after that HA has only about $55 million in the bank. I'm guessing they need $20-$25 million cash at a minimum to operate. So there doesn't appear to be an awful lot of time left.

The more I think about such a deal, I think it could very well be done in the way the AMR/TWA deal was. HA is certainly heading toward bankruptcy, and a prepackaged asset purchase out of bankruptcy would probably be cheaper for AWA than buying the company before bankruptcy. That would probably allow AWA to trim a little extra fat from HA.

The only way I see HA avoiding bankruptcy is if it has some line of credit somewhere waiting to be tapped, therefore buying time until travel recovers. And that's still not a great strategy.
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Just one quick note to add...AWA Vacations just announced they are adding Hawaii destinations, to go with LAS and PHX...could be lucrative for AWA regardless.