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Over the past week or so, it was announced that Virgin America had put itself up for sale, looking for bidders. There had been rumors of various airlines that might have interest, from Delta, to China’s Hainan Airlines, but in the past week it became clear that Alaska Airlines and JetBlue were the final bidders.
Now, according to The New York Times, it looks like Alaska Airlines has submitted the winning bid, and it may be announced as soon as Monday. Alaska is reportedly paying $2 billion for San Francisco-based Virgin America, which only has a market cap of about $1.5billion. If Alaska’s bid is in fact accepted, and the merger goes through, it will make the combined company the 5th largest airline in the US (behind American, Delta, United and Southwest). There is also more information in a Wall Street Journal article, though it is behind a paywall.
So what next?
Well, as we’ve learned from the Marriott – Starwood on again off again on again merger, this is still far from a done deal. But if it goes through, one would assume that Alaska would eventually fold in Virgin America’s operations including their loyalty program. My guess is that would be a ways off, as Virgin America’s loyalty program is revenue based, and Alaska’s is not, and Alaska has repeatedly said that they are not interested in going revenue-based. Personally, I am generally on the side of more competition, and I have read reports that this merger will actually INCREASE competition, by making the new Alaska more on part with the larger US airlines (the “Big 3” + Southwest). Living in Alaska “flyover country”, I don’t have a huge stake in this merger, though I enjoyed getting their miles and using them to fly first class on Emirates (but not any more)
If you are a frequent flier on Alaska or Virgin America, what do YOU think?