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Over the weekend, news broke that it was looking like Alaska Airlines was the final and winning bidder for Virgin America. The Wall Street Journal and New York Times had reported the deal, and mentioned that it was likely going to be announced on Monday.
Well, here we are on Monday and indeed, it is official. Here is the official announcement from the Alaska Airlines presroom, and you can also read more news on the Alaska Airlines blog (the same blog where they blamed “travel hackers” for their no-notice devaluation of Emirates first and business class awards)
Details of the Alaska Airlines / Virgin America deal
The announcement says that Alaska will be paying $57 / share for Virgin America in cash. That’s $2.6 billion in cash, but the purchase price also reaches $4 BILLION when you include Virgin’s debt that Alaska will now assume. It’s couched as a “merger”, but it is pretty clearly a buyout by Alaska.
Other than that, the announcement doesn’t really say a lot, which is fairly standard for these types of merger / agreement. It does still need to be approved by Virgin America’s board of directors and regulatory authorities.
Gary from View from the Wing points out also that they have announced that Alaska Airlines’s Mileage Plan loyalty program will be loyalty program for the combined airline, and it is still unclear what if anything will be done with the name / brand “Virgin America”
Is this a good move?
Only time will tell if this makes sense. On the surface, I tend to agree with Wandering Aramean who points out things like how tough the market in SFO and LAX is, and how access to LaGuardia is great but because it’s distance controlled, you’d figure Alaska would need to continue to fly that out of Dallas. All this at a cost of $300-$350 million in acquisition costs, which is of course not pocket change.
What do you think? Good move by Alaska, or not?