Alaska Air Group, parent of Alaska Airlines, and Virgin America are to merge and create a major presence on the US West Coast. The $4 billion deal was unanimously approved by both company’s boards of directors. Although described as a merger, Alaska Airlines will take control of its rival operator and become the nation’s fifth largest carrier. The deal, the company claims, will expand its West Coast market share significantly, giving it a larger customer base, an enhanced platform for future growth as well as positioning the expanded Alaska Airlines to provide more choices for its customers, increase competition in the market as well as delivering stronger returns to its investors.
The merger will help to expand Alaska Airlines’ existing footprint in California and boost its well-established core markets in the Pacific Northwest and the state of Alaska. Virgin America’s strong foundation in California will help make Alaska Airlines a major force in and out of the Golden State’s airports, including San Francisco and Los Angeles. For Virgin America customers, services will expand to the thriving technology markets in Silicon Valley and Seattle.
Brad Tilden, chairman and CEO of Alaska Air Group, said: “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. We look forward to bringing together two incredible groups of employees to build on the successes they have achieved as standalone companies to make us an even stronger competitor nationally.”
Alaska Air said the combined airline would have 1,200 daily departures, with hubs in Seattle, San Francisco, Los Angeles, Anchorage and Portland, Oregon. It will operate a fleet of around 280 aircraft, including Virgin America’s 60 Airbus A319 and A320 jets. The newly combined organisation will be based in Seattle under the continued leadership of Tilden and his senior leadership team. Until regulatory approvals are received, Tilden and David Cush, president and CEO of Virgin America, will co-lead a transition team developing a specific integration plan. The group intends applying for a single operating certificate. Alaska will maintain its new, refreshed brand while looking closely at Virgin America to learn more about the carrier’s award-winning brand and customer experience. Both airlines expect to complete the transaction by no later than January 1, 2017.