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Alaska closes Virgin America buy to create 5th largest US airline

Alaska closes Virgin America buy to create 5th largest US airline

first_imgAlaska Air Group Alaska closes Virgin America buy to create 5th largest US airlineAlaska closes Virgin America buy to create 5th largest US airlineSeattle-based Alaska Air Group has closed its $4 billion acquisition of San Francisco-based Virgin America, creating the fifth largest airline in the US.Alaska Air Group subsidiary Alaska Airlines and Virgin America will seek to secure a single operating certificate from FAA by early 2018. Regional subsidiary Horizon Air will retain its own operating certificate.Alaska reached an agreement April 4 to buy Virgin America for $2.6 billion and additionally take on $1.4 billion in debt and aircraft lease obligations, creating a $4 billion enterprise value for the transaction. The merger gained antitrust clearance from the US Department of Justice(DOJ) Dec. 6 after Alaska agreed to reduce its codesharing relationship with American Airlines.By combining Alaska’s strong presence in the US Pacific Northwest with Virgin America’s strong presence at major California airports, Alaska believes the combined carrier can become the leading domestic services airline on the US west coast. The combined company, which will be based in Seattle, will offer nearly 1,200 daily flights to 118 destinations while generating more than $7 billion in annual revenue. The combined fleet comprises 286 aircraft, including more than 150 mainline Alaska Boeing 737s and more than 60 Virgin America Airbus A320 family aircraft.“The combination expands service and provides more frequent connections to international airline partners in thriving technology markets in the [San Francisco] Bay Area, Los Angeles and Seattle,” Alaska said in a statement. “Together, the airlines offer 289 daily flights to 52 destinations from California, including 113 daily nonstop flights to 32 destinations from three Bay Area airports and 105 daily nonstop flights to 37 destinations from four Los Angeles area airports.”Alaska added that the combination also grows its access to important east coast airports such as Washington National, New York JFK, New York LaGuardia and New York Newark.The first signs of integration will become noticeable to the public Dec. 19, when Alaska and Virgin America passengers will be able to earn frequent flyer miles on the flights of either airline and Virgin America flight tickets will become available on Alaska’s website.Alaska executives have not decided on the future of the Virgin America brand. “Alaska plans to continue to operate the Virgin America fleet with its current name and product for a period of time while it conducts extensive customer research,” Alaska said in a statement. “Virgin America will continue to fly under its brand with no immediate changes to the onboard product or experience.”Alaska CEO Brad Tilden added, “We appreciate that there is great interest in the future of the Virgin America brand among customers and employees alike. This is a big decision and one that deserves months of thoughtful and thorough analysis. We plan to make a decision about the Virgin America brand early next year.”Alaska, a longtime Boeing customer, will also have to decide whether to operate a dual mainline fleet of 737s and A320s; Virgin America has ordered 40 A320neo family aircraft with deliveries scheduled to start next year.Alaska president and COO Ben Minicucci will take on the role of Virgin America CEO, effective immediately and lasting until Alaska Airlines-Virgin America gains a single operating certificate. Virgin America CFO Peter Hunt will serve as president of Virgin America, reporting to Minicucci.Aaron KarpSource = Aaron Karp – ATWlast_img read more