Alaska Air’s Merger with Virgin America will Expand its Presence into Major Destinations
Alaska Air Group Inc. outbid others and is close to reaching a deal to buy Virgin America Inc. Burlingame, California based Virgin America ranks ninth among the U.S. airline by passenger traffic.
Alaska Air values the overall deal at approximately $4 billion including debts. Alaska Airlines will pay $57 per share to Virgin America. The news worked well for the airlines on Monday and Virgin America's shares increased by 41 percent to $54.86. However, shares of Alaska Air dropped five percent at $77.89.
Virgin Group founder Richard Branson was saddened that the wonderful airline will merge with another.
Travel industry analyst Henry Harteveldt said, "It's inevitable that we would see some form of combination (among smaller airlines) as they strive to find a way to compete with the larger carriers."
The Virgin Atlantic board accepted the offer from Alaska Airlines against Branson's will.
Alaska Air Group based in Seattle said by acquiring Virgin America it can "expand its California presence, while creating new opportunities for growth and competition."
After the merger is completed Alaska Air will fly from San Francisco to many key markets like New York, Washington D.C, Los Angeles, Chicago, Boston, Las Vegas and San Diego.
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