Alaska Airlines Purchase Virgin America
Alaska Airlines is reportedly nearing a deal to purchase Virgin America for about $2 billion according to the Wall Street Journal. JetBlue and Alaska have both bid on the boutique airline, but Alaska seems to be willing to overpay given Virgin’s market valuation of about $1.5 billion.
While the deal is not yet confirmed, the Journal says an announcement could come as soon as Monday. As of now Alaska is the 6th largest airline by traffic and adding Virgin would catapult them past JetBlue and into the number five position.
This purchase would bolster Alaska’s presence in two of the largest West Coast airports, San Francisco and Los Angeles. Following the purchase Alaska would have 15% of the seats offered in San Francisco and 11% in Los Angeles. That is up from their current levels of 4% & 5% respectively.
Since Virgin and Alaska overlap on very few routes, this adds a lot of new city pairs for Alaska, but it also adds a interesting change to their fleet. As of now Alaska Airlines only operates Boeing 737 aircraft and Virgin America operates only Airbus A319 and A320 aircraft. There will definitely be some challenges in integrating this fleet, both considering the manufacturer difference and the on board product as well.
You can find more information about this breaking news in the Wall Street Journal article. If you don’t have access behind the pay wall then simply search for “Alaska Air Nearing Deal to Acquire Virgin America” on Google and click through from the search engine to get the full article. (Note: This worked for me, but some people are apparently having issues as WSJ tries to shut down this trick.)
What do you think? Is Virgin America a better fit for Alaska or JetBlue? Are you happy with this news or does this week’s letdown by Alaska change your opinion of this deal? Let us know in the comments!