Alaska Airlines snaps up Virgin America in US$4bn deal

Alaska Airlines and Virgin America will operate a combined fleet of 280 aircraft
Alaska Airlines and Virgin America will operate a combined fleet of 280 aircraft

Alaska Airlines has agreed to acquire Virgin America in a deal worth approximately US$4 billion.

Under the agreement, Alaska Air Group will pay US$57.00 per share in cash for California-based Virgin. This will enable Alaska to significantly expand its presence in California, which is seen as a key focus area for the Seattle-based company.

The combined company would become a major force in the US West Coast region, with hubs in San Francisco, Los Angeles, Seattle and Portland, and a combined fleet of approximately 280 aircraft providing 1,200 daily departures. The group would also maintain a dominant position in Alaska from its Anchorage hub.

“With our expanded network and strong presence in California, we’ll offer customers more attractive flight options for non-stop travel. We look forward to bringing together two incredible groups of employees to build on the successes they have achieved as standalone companies to make us an even stronger competitor nationally,” said Alaska Air Group’s chairman & CEO, Brad Tilden.

David Cush, Virgin America’s president & CEO, commented; “Our mission has always been to create an airline that people love – and we accomplished that while changing the industry for the better. Joining forces with Alaska Airlines will ensure that our mission lives on, and that the stronger, combined company will continue to be a great place to work and an airline that focuses on an outstanding travel experience.”

The two companies expect to complete the transaction no later than 1 January 2017 and the company’s headquarters will remain in Seattle.

This will mark the latest in a series of mergers and acquisitions within the US aviation sector. Delta Air Lines acquired Northwest Airlines in 2008, and two years later United Airlines merged with Continental. Most recently, American Airlines merged with US Airways to create the world’s largest airline group.

The merger of Alaska and Virgin America would effectively leave the US with six major airlines, with American, Delta, United and Alaska competing with low-cost carriers Southwest Airlines and JetBlue.

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