Alaska Air to acquire Virgin America for $4 billion

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Alaska Airlines parent company Alaska Air Group has reached a deal to acquire Virgin America for approximately $4 billion, creating the 5th largest airline in the United States.

The companies said in a joint statement released on early Monday that their boards of directors had unanimously approved a definitive merger agreement in which Alaska Air Group acquires Virgin America for $57.00 per share in cash.

The merger will create the 5th largest airline in the United States and allows Alaska Air to enter the important air market in California, where Virgin America already has a strong foundation. The combined airline will have its headquarters in Seattle.

“Virgin America and Alaska are two great airlines that consistently deliver low fares and and outstanding customer experience. By bringing them together, we’re creating the premier airline for people who live anywhere on the West Coast,” said Brad Tilden, the chief executive of Alaska Air Group

Upon completion of the merger, the combined airline will have 1,200 daily departures, with hubs in Seattle, San Francisco, Los Angeles, Anchorage, and Portland, to serve 114 destinations in 4 countries. The airline’s fleet will consist of about 280 aircraft, including regional planes.

Virgin America is the brainchild of British entrepreneur Richard Branson, but U.S. law prohibits an American airline from being owned and controlled by foreign citizens, which forced Branson to become a minority owner along with non-voting shares.

In a blog post, Branson expressed regret over Alaska Air’s acquisition of Virgin America but said he was proud of the company’s workers and accomplishments. “I would be lying if I didn’t admit sadness that our wonderful airline is merging with another,” he said. “There was sadly nothing I could do to stop it.”

The merger announced on Monday will still have to receive regulatory approval to close.

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