Alaska Air In $2bn Deal To Buy Virgin America
Alaska Air Group is set to buy Virgin America (NasdaqGS: VA - news) in a deal worth more than $2bn that will expand its network to include 1,200 daily departures.
The deal will give the Alaska Airlines parent company - currently the sixth-largest US carrier by traffic - a bigger presence in San Francisco and Los Angeles and more transcontinental service.
The combined business, which will be based in Seattle, will have around 280 aircraft.
Virgin America, set up by British billionaire Sir Richard Branson, began flying in 2007, turned a profit in 2013 and earned a record $340.5m last year.
It (Other OTC: ITGL - news) has experienced growth in Dallas and added a new service to Hawaii and Denver, but has had trouble getting enough takeoff and landing slots at busy New York airports.
Alaska Airlines currently serves 90 destinations in the US, Canada and Mexico.
The deal would also give Alaska more access to some airports on the East Coast, including JFK and LaGuardia Airports in New York.
The airline has said it expects between $300m to $350m in integration costs.
Boards at both companies have approved the deal, which is expected to close by 1 January next year, but it still needs to be approved by Virgin America shareholders.
Alaska Air (NYSE: ALK - news) chief executive Brad Tilden, who will lead the combined company, said in a news release: "With (Other OTC: WWTH - news) our expanded network and strong presence in California, we'll offer customers more attractive flight options for non-stop travel.
"We look forward to bringing together two incredible groups of employees to build on the successes they have achieved as stand-alone companies to make us an even stronger competitor nationally."
The total value of the deal, including debt and aircraft operating leases, could be worth as much as $4bn.