Virgin America to Be Sold for $2.6 Billion to Alaska Airlines

April 4, 2016By: Joe Pike

Several media outlets are confirming what most travel experts have been expecting since last week – the domestic, low-cost carrier Virgin America is near a sale for $2.6 billion to Alaska Airlines. 

According to Reuters, Alaska Air Group Inc said on Monday that it would buy Virgin America Inc for $2.6 billion to become the top carrier on the U.S. West Coast and compete more effectively with larger airlines.

The deal appears to end what Alaska Air Chief Executive Officer Brad Tilden called a “hard-fought competition” to purchase Virgin America, according to Reuters.

JetBlue Airways Corp had also made an offer for the offshoot of billionaire Richard Branson‘s London-based Virgin Group, which had become famous for its mood lighting and media-rich entertainment on flights, according to the report.

“By joining forces with Alaska Airlines – an airline that is also known for its leading operational performance and guest-focus – we are creating the best airline in North America and one with the size and market share necessary to compete in this consolidated environment,” said David Cush, president and CEO of Virgin America, in an e-mail sent to Travel Agent and other media. “The transaction, which we expect to take several months to close, is subject to approval by regulators, Virgin America shareholders and other conditions.”

According to Reuters, the deal would create the fifth-largest U.S. airline after a decade of mergers that have shrunk the industry to a handful of companies. The top four control more than 80 percent of the U.S. travel market.

“With complementary West Coast-based networks and similar cultures focused on guest service and operational efficiency, the joining of the two carriers will not only create a stronger and more competitive airline, it will create a leading guest experience for travelers like you,” said Cush, “while also significantly expanding your flying options across a larger network of destinations in North America and across Alaska Airlines’ robust international partner network.”

Accoriding to Reuters, the companies face major hurdles in the integration, although Alaska Air expressed confidence in its ability to tackle them. It must juggle the contracts of workers with disparate pay, benefits and seniority. Alaska Air said its unions and pilot leadership were on board with the merger, according to the report.

“In the meantime, Virgin America and Alaska Airlines will continue to operate as two independent companies,” said Cush. “Our current ‘Elevate’ frequent flyer program will remain in effect until that time. We will be providing you with updates as we move closer to completing the transaction, but please know that both companies are committed to ensuring that this merger will have no impact on your flying experience.

“After transaction close,” continued Cush, “both airlines will work to integrate the Virgin America Elevate program into the Alaska Airlines Mileage Plan program with no disruption to your earning or redemptions.”

For the Reuters story, click here and keep visiting www.travelagentcentral.com for more updates on this developing story. Be sure to follow Travel Agent’s Joe Pike on Twitter @TravelPike.