Alaska to Acquire Virgin America for $2.6 Billion
Alaska, the parent of Alaska Airlines, and Virgin America said that their boards of directors have approved a definitive merger agreement. The deal calls for Alaska to acquire Virgin America for $57 per share in cash or $2.6 billion.
The combined airline, which will keep the Alaska Airlines name, would create the No. 5 U.S. carrier by traffic, a spot currently held by JetBlue, although it would be a very distant fifth, given that the largest four U.S. airlines control more than 80% of the U.S. market following a wave of consolidation.
The merger, which is expected to close before January 1, 2017, will require regulatory approval as well as the approval of Virgin America shareholders. It is expected to receive scrutiny from the U.S. Justice Department’s anti-trust division as well. The combined airline will be led by Alaska Air Group CEO Brad Tilden and Alaska’s current leadership team.
The combination of the two airlines, which will give Alaska an expanded presence in California and 1,200 daily departures, will “make us an even stronger competitor nationally,” Tilden said in a statement Monday.
The airline plans to continue its Mileage Plan frequent flyer program and merge members of Virgin America’s Elevate program at a future date.
(Photo: Accura Media Group)