Sunday, December 23, 2001

The merger of Aloha and hawaiian


Merging cultures could
challenge airlines

Aloha and Hawaiian have a combined
127-year history as competitors in the market

By Lyn Danninger

Among the questions raised by the proposed merger of Hawaiian and Aloha Airlines, worth $200 million, is how new CEO Greg Brenneman plans to merge two distinctively different corporate cultures.

Despite the bright predictions, melding two rival companies -- one public, one privately held -- with a combined history of 127 years in Hawaii will be no easy task.

There'll likely be days when Brenneman feels like the marriage counselor to a troubled couple, say observers.

"It won't be accomplished overnight," said Chuck Gee, long time observer of other such alliances in the travel industry and former dean of the University of Hawaii School of Travel Industry Management.

A merger is one of the hardest things for any CEO to accomplish, said Gee.

"Unfortunately people always feel that there's winners and losers," he said.

"The most serious thing will be a morale issue. When you merge two companies that have operated uneasily over the past year then all of a sudden the mat is jerked out from under, you've introduced an element of insecurity. And who knows how many will ultimately lose jobs," he said.

Still, apart from concerns about the loss of competition and eventual higher airfares, Gee said it's ultimately better to have one carrier in good financial shape.

"If it's a choice between having no carrier versus two really sick ones then I think it's better to have one strong one still operating -- even at higher fares," he said.

The merger will give the airlines the opportunity to bring together the best of each company, said John Garibaldi, another long-time industry observer and former insider at both airlines.

Garibaldi was chief financial officer at Aloha Airlines from 1982 until 1985. He held the same position at Hawaiian Airlines from 1996 through mid-2000.

"Aloha has a lot of strength and focus on the inter-island market and it has built up tremendous loyalty among residents. They bring more of a local flavor to it," he said.

"Hawaiian is a proven provider of long-haul transportation whereas Aloha is just getting into that. They'll learn quite a bit that will help them with their current flights (to the mainland), he said.

But ultimately, Garibaldi believes it will be the employees that determine how smoothly the merger of the two cultures will be accomplished, he said.

"You see it in the face of the employees," he said. "At the end of the day, these are the people that make it happen.

"There'll be some initial discomfort," he said. "They are not the same airline even though they have a lot of the same ingredients."

Unlike Aloha's employees, Garibaldi notes Hawaiian's employees have already experienced a number of ownership changes and may in some ways be better prepared for the change.

"Hawaiian employees have given and given over the years. They've seen the revolving doors of ownership whereas I think the Aloha people have felt the brunt of the economy in the last couple of years," he said.

During his tenure, Garibaldi also remembers the two carriers holding possible merger talks over the years but never being able to reach agreement.

"About every 10 years or so, there had been some kind of discussion between Hawaiian and Aloha."

Garibaldi credits Brenneman with helping to bring about the change in attitude.

"It really took a third party to bring them together."

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