Alaska Air Group, parent company of Alaska Airlines, has agreed to acquire Virgin America for $2.6 billion. Alaska Air will pay Virgin America stakeholders $57 per share in cash.

When including Virgin America's debt and capitalized aircraft operating leases, the aggregate transaction value is $4 billion, said Alaska Air.

The two airlines say they intend to create "the premier West Coast airline."

"Our employees have worked hard to earn the deep loyalty of customers in the Pacific Northwest and Alaska, while the Virgin America team has done the same in California. Together we will continue to deliver what customers tell us they want: low fares, unmatched reliability and outstanding customer service," said Brad Tilden, chairman and CEO of Alaska Air Group.

Combined, Alaska and Virgin America will have 1,200 daily departures, with hubs in Seattle, San Francisco, Los Angeles, Anchorage and Portland.

The airlines said they have 280 aircraft, including Alaska's regional planes, with an average age of 8.5 years.

Virgin America's fleet of 60 Airbus A319 and A320 aircraft have three classes of service, in-flight WiFi and power outlets on every flight, as well as personal, touch-screen seatback entertainment.

Addressing the fact that the airlines have different products, Alaska Air said, "While the companies apply for a single operating certificate, Alaska will maintain its new, refreshed brand and will work closely with Virgin America to learn more about the award-winning Virgin America brand and customer experience. And over the next few months Alaska will explore with the Virgin Group how the Virgin America brand could continue to serve a role in driving customer acquisition and loyalty to get the best from both brands."

Until the transaction closes, both loyalty programs will remain distinct. After the deal consummates, Virgin America Elevate members will join the Alaska Airlines Mileage Plan.

The combined organization will be based in Seattle under the leadership of Tilden and his senior leadership team. Until receiving regulatory approval to close, Tilden and Virgin America CEO David Cush will co-lead a transition team.

The companies expect to complete the transaction by Jan. 1, 2017, pending regulatory and shareholder approval.

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