Story ID: GPalaskavirgin04042016
Alaska Air Group To Buy Virgin America
By: Gregory Polek
Caption: Combination to expand Alaska Airlines’ footprint in California and U.S. East Coast
Word Count: 508
Alaska Air Group confirmed Monday that its board of directors has approved its acquisition of Virgin America in a deal valued at some $2.6 billion in cash and another $1.4  billion worth of Virgin America indebtedness and capitalized aircraft leases. According to Alaska, the merger allows Alaska Airlines to expand its West Coast presence, better positioning it to provide more customer choice, increase competition and deliver investor returns. The sides expect the deal to close by January 1 and to merge their respective operating certificates in the first quarter of 2018.

“The combination expands Alaska Airlines’ existing footprint in California, bolsters its platform for growth and strengthens the company as a competitor to the four largest U.S. airlines,” Alaska Air Group said in a statement. “Combining Alaska Airlines’ well-established core markets in the Pacific Northwest and the state of Alaska with Virgin America’s strong foundation in California will make Alaska Airlines the go-to airline for the more than 175,000 daily fliers in and out of Golden State airports, including San Francisco and Los Angeles.”

Assuming the deal passes regulatory review, the combined airline will operate 1,200 daily departures from hubs in Seattle; San Francisco; Los Angeles; Anchorage, Alaska; and Portland, Oregon. It will fly some 280 aircraft, including regional airplanes, averaging 8.5 years of age.  

While the combined airline stands to offers more frequent connections to international airline partners departing Seattle, San Francisco and Los Angeles, the merger would also allow Alaska Airlines access to East Coast business markets, most notably slot-controlled airports such as Reagan National in Washington, D.C., and JFK and La Guardia in New York.

Appearing on CNBC Monday, Virgin America president and CEO David Cush explained the rationale behind the decision to accept Alaska’s offer over that of JetBlue, the other suitor for his airline. “I will say price was a primary thing here,” he said. “You know, that we understand what our fiduciary duty is. They were both qualified buyers so, ultimately, it came down to price. We thought the Alaska plan was a very good plan. It was about establishing a powerhouse on the West Coast that would have strong presences in Seattle, San Francisco, and L.A., so we like that. And very simply, they came in with a very strong offer.”

Significantly, the announcement met with approval from Alaska Airlines’ pilots and flight attendants, both of which issued enthusiastic statements about the potential for further job growth at the combined airline.   

“Today’s merger announcement of two great airlines coming together provides both pilot groups with an outstanding opportunity to benefit from the growth of the expanded Alaska Airlines’ route network,” said Chris Notaro, chairman of the Air Line Pilots Association Alaska Airlines pilot group. “We would like to welcome the professional pilots of Virgin America to the Alaska family and we look forward to a common goal of building a new joint pilot group that will benefit from a stronger and more prosperous airline that we have helped build.”