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
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
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
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.