Hawaii airlines merging

Thursday, Dec. 20, 2001 | 11:17 a.m.

SUN STAFF AND WIRE REPORTS

Hawaii's two inter-island airlines will merge, a decision that is likely to lead to higher fares and job cuts.

The new company expects savings of $90 million from the $170 million merger, mostly by consolidating operations and eliminating excess aircraft. The merger was announced Wednesday.

The new airline says it expects to have annual revenues of $1 billion, making it the 10th-largest U.S. carrier. The deal is subject to federal and state approval.

Both airlines have struggled since the Sept. 11 terrorist attacks sharply cut travel to the islands. Aloha reported a $1.25 million loss for its third quarter, while Hawaiian reported a net profit of $12 million.

Since Sept. 11 the two airlines have cut more than 600 jobs and reduced flights. Hawaiian Airlines employs about 3,100 people, while Aloha has about 3,000 employees.

Aloha has three flights a day between Honolulu and Las Vegas's McCarran International Airport, with connections through Oakland, Calif., and Orange County.

Hawaiian Airlines serves McCarran with one flight a day, plus an additional flight per week, with connections through Los Angeles.

There was no immediate word on whether any Las Vegas flights would be affected by the merger.

Hawaii Gov. Ben Cayetano said cost-cutting would lead to job losses, but the airlines could soften the impact with severance packages.

He said he favors the merger: "Airline travel is the life's blood of our state and if we don't keep the airlines going and viable, then we're going to have some real problems."