Alaska Air Group closes $2.6-bn acquisition of Virgin America

15 Dec 2016


The parent company of Alaska Airlines has closed its deal to buy Virgin America, to emerge the fifth-largest US domestic carrier.

the merged entity plans to take on rivals in a bid to emerge the dominant airline on the West Coast.

Alaska Air Group closed the $2.6-billion acquisition of Burlingame, California-based Virgin America yesterday, a week after the justice department approved the deal (See: Alaska Air, US regulators near settlement on $2.6-bn acquisition of Virgin America).

Even though the operations of the two airlines would not be combined immediately, travellers could buy Virgin America tickets on the Alaska Airlines website starting Monday. 

According to executives of Alaska Airlines, the newly merged airline would focus on becoming the dominant West Coast carrier, with a combined fleet of 286 planes and 18,800 employees. Between them, the two airlines operate 289 daily flights from California. On 21 December, Alaska planned to announce new daily flights from San Francisco to Santa Ana, Minneapolis and Orlando, Florida.

The acquisition of Virgin America by Alaska Air Group represented the latest in a series of airline combinations that had raised the hackles of antitrust activists.

According to industry experts, the two would eventually form a single carrier to compete with its larger rivals in battleground markets including Los Angeles and San Francisco.

''Ultimately this is going to be one airline,'' said Seth Kaplan, founding partner for the trade magazine Airline Weekly, Los Angeles Times reported in its online edition. ''Most certainly it will be called Alaska.''

By adding Virgin's routes out of California to its own dominance out of Seattle, Portland and the state of Alaska, the deal represented a bold move by Seattle-based Alaska Airlines to buy growth, according to competitors.

Brad Tilden, Alaska's CEO, said he had ''a sleepless night or two'' about the challenges ahead in merging operations, the deal would however, ensure Alaska can survive and thrive as an independent airline for decades.

''We're not going to slow down a step in Seattle. But there is a very large opportunity in California and we are going after that,'' Tilden said in an interview, The Seattle Times reported. ''It gives us critical mass. If we want to be here 10, 15 or 25 years from now, … it's good that we be bigger."

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