Alaska Air on the Brink of Purchasing Virgin America
Alaska Air Group, Inc. is set to become a major player in the commercial flight industry as the company is almost certain to purchase another airliner in Virgin America Inc. for a reported price of $2 billion. Alaska Air outbid an existing airline giant in JetBlue Airways Corporation.
According to Reuters, once the merger becomes official, it will be the first time for the U.S. commercial airline industry since US Airways and the American Airlines merged three years ago. That merger would later become the biggest and largest carrier in the world.
The purchase of Virgin America Inc. makes perfect sense for Alaska Air that has been waiting to infiltrate other domestic markets, and in this particular instance, they will have a lion's share of the busy Los Angeles and San Francisco hubs.
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The acquisition will likewise boost Alaska Air's percentage in domestic flight shares since Virgin America owns about 1.5 percent of the entire U.S. domestic flight capacity. The move is basically seen as an attempt by Alaska Air, which still is considered a small carrier to become a larger company. Larger carriers obviously own a majority of the market.
However, the same report said that the deal is expected to be dissected by government regulators since there is always that risk of overlapping in airport spaces and routes.
Virgin America is part of the London-based Virgin Group of Richard Branson. With headquarters in California, the airliner only became part of the stock market in 2014, but it quickly became a preference of many travelers due to its unique amenities like high quality leather seats and a comprehensive entertainment system.
Alaska Air on the other hand is based in Seattle and is currently serving over a hundred American cities as well as offering flights in Canada, Mexico, and Costa Rica.
While no deal has become official, announcement is expected by next week.
