Aviation News

April 4, 2016

West Coast Powerhouse: Alaska Airlines To Buy Virgin America

Two widely popular carriers known for low-fare service and exceptional customer service are merging. It was officially confirmed this morning that the rumors of an Alaska Airlines and a Virgin America merger is actually fact, not fiction. According the official press release published this morning, the value of this merger is to the tune of $4.0 billion dollars, “under which Alaska Air Group will acquire Virgin America for $57.00 per share in cash.” The total value includes existing Virgin America indebtedness and capitalized aircraft operating leases, while Alaska Airlines will pay a total of $2.6 billion in cash for Virgin America’s shares. The Seattle-based airline plans to pay with a combination of $2 billion of new debt and $600 million worth of cash on hand. The merger is the first for Virgin America and the first since 1986 for Alaska Airlines.

Of the many goals announced as the intent of the merger, a primary appears to be the expansion of Alaska Airline’s presence in the California market, a catchment area wherein Virgin America already has a well-established route network. The press release notes that, “The combination expands Alaska Airlines’ existing footprint in California, bolsters its platform for growth and strengthens the company as a competitor to the four largest U.S. airlines. Combining Alaska Airlines’ well-established core markets in the Pacific Northwest and the state of Alaska with Virgin America’s strong foundation in California will make Alaska Airlines the go-to airline for the more than 175,000 daily fliers in and out of Golden State airports, including San Francisco and Los Angeles.”

Extra: The combined routes of Alaska Airlines and Virgin America

The highlights of Alaska Airlines and Virgin America moving forward in unison includes a combined 1200 daily departures and nearly 280 operating aircraft. That fleet total includes regional airplanes and 60 Airbus A319 and A320 planes. The latter aircraft feature three classes of service and an expansive IFE system for air travelers. The merger will also result in hubs in Seattle, San Francisco, Anchorage, and Portland. The combined airline will also have a large presence at Los Angeles International Airport.

Ultimately, both airlines are seeking to provide air travelers with the best service and route network the combined carriers can mutually provide. David Cush, Virgin America president and CEO was quotes as saying, “Our mission has always been to create an airline that people love – and we accomplished that while changing the industry for the better. Joining forces with Alaska Airlines will ensure that our mission lives on, and that the stronger, combined company will continue to be a great place to work and an airline that focuses on an outstanding travel experience.”

Does this merger mean the costs will be passed on to customers in higher fares? Only time will tell. In the mean time, the airlines are prepping their frequently flying passengers to experience a fusion of their mileage programs into one “enhanced mileage plan.”

(Image courtesy Alaska Airlines)

About the Author

Stephanie Gehman



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