Alaska Airlines Holding To Buy Virgin America

Alaska Airlines Boeing 737-800

Alaska Airlines Boeing 737-800

The parent company of Alaska Airlines has reached a deal to buy Virgin America, creating an airline focused on the West Coast. If approved by regulators and shareholders of Virgin America, the combined airline will be the fifth largest US operator, according to Alaska Air Group.

"By bringing them together, we are creating the first airline to people living anywhere on the West Coast," said Alaska Air Group CEO Brad Tilden in a statement.

The news of the USD 2.6 million comes after a heated war deals with JetBlue. According to The Wall Street Journal, "a person familiar with the just said it was" a ferocious back and forth between the two sides, with multiple bids for a number of days. "But ultimately, JetBlue put the pencil 'because the price had become too high".

Virgin founder Richard Branson America says in a statement, "Consolidation is a trend that unfortunately can not be stopped. ... I'd be lying if I did not admit sadness that our wonderful airline is merging with another." Branson added that because it is not a US citizen, "Department of Transportation requires taking some of my actions Virgin America shares without voting rights, which reduces my influence over any takeover. So no it was sadly nothing I could do to stop it. "
Airbus A320-200 of Virgin America

Airbus A320-200 of Virgin America

Under the terms of the agreement, Alaska will pay USD 57 in cash per share of Virgin America. Including existing aircraft leases and capital debt, it is expected to offer a total value of USD 4 billion. board of directors of both companies have approved the merger agreement.

The new company will be headquartered in Seattle, with a fleet of 280-plus aircraft, according to a fact sheet. Revenue is expected to increase 27 percent to between USD 7 billion per year as a result of the agreement, expected to close on January 1, 2017.

The Associated Press reports that Virgin America "went public in 2014 and although it has grown in Dallas and added a new service to Hawaii and Denver, the airline was having trouble getting enough slots for takeoffs and landings at airports busy from New York." In addition, according to the news service, "their limited size and schedule make it difficult for the company to compete with larger vehicles for lucrative business travelers."
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