Alaska Air nears deal to buy Virgin America for over $2 billion - sources | Reuters - Firstpost
Powered By:
In Association With:
You are here:

Alaska Air nears deal to buy Virgin America for over $2 billion - sources | Reuters

  Updated: Apr 3, 2016 10:00 IST

#Alaska   #America   #article   #Business   #Entertainment  

Alaska Air Group Inc is nearing a deal to acquire Virgin America Inc, the ninth-largest U.S. airline by passenger traffic, for more than $2 billion, having outbid JetBlue Airways Corp, people familiar with the matter said on Saturday.

The acquisition would herald the first U.S. commercial airline merger since US Airways and American Airlines combined in 2013 to form the world's largest carrier. It would boost the size of Alaska Air's home market by allowing it to expand into lucrative hubs such as San Francisco and Los Angeles.

Alaska Air is set to pay between $56 and $58 per share to acquire Virgin America, the people said. A deal could be announced as early as Monday, the people added, asking not to be identified because the agreement had not yet been finalized.

Alaska Air, Virgin America and JetBlue did not respond to requests for comment.

Burlingame, California-based Virgin America went public in the U.S. stock market in 2014 as an offshoot of billionaire Richard Branson's London-based Virgin Group. Launched as a low-cost U.S. airline, it became famous for its mood lighting, comfortable leather seats and media-rich inflight entertainment system.

Based in Seattle, Alaska Air and its partner regional airlines serve more than 100 cities in the United States, Canada, Costa Rica and Mexico. It has a market capitalization of $10.2 billion.

Virgin America accounts for about 1.5 percent of U.S. domestic flight capacity, while Alaska Air and its subsidiary Horizon Air account for 5 percent, Deutsche Bank analyst Michael Linenberg wrote in a recent research note. JetBlue accounts for 6 percent, according to the note.

"It's inevitable that we would see some form of combination (among smaller airlines) as they strive to find a way to compete with the larger carriers," said travel industry analyst Henry Harteveldt.

Government regulators are expected to scrutinize the deal between Alaska Air and Virgin America for potential overlap in routes and airport slots.

Mega-mergers in the past decade have reduced the U.S. industry to four top players that control more than 80 percent of the market.

The Wall Street Journal reported earlier on Saturday that Alaska Air had emerged as the likely winner of an auction for Virgin America.

(Reporting by Greg Roumeliotis and Jeffrey Dastin in New York; Additional reporting by Mike Stone in New York; Editing by Dan Grebler)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Comment using Disqus

Show Comments