I just received a press release detailing and confirming Alaska Airlines’ plans to purchase Virgin America for $2.6 billion — slightly higher than the $2.5 billion rumored yesterday. What does Alaska provide as justification for the acquisition?
- Combines two airlines known for “outstanding customer service and low fares.”
- Expanded presence for Alaska Airlines in California and a network total of 1,200 daily departures.
- Expected to increase annual revenue 27% to over $7 billion and offer $225 million in net synergies.
For those of you who were worried, the company will be maintaining its headquarters in Seattle and will welcome Virgin America’s Elevate members into Alaska Mileage Plan. Brad Tilden will remain CEO, and Alaska will maintain its new brand image. But it’s interesting to see a comment that “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 both brands.”
You can read more about the companies’ plans in an informational microsite titled “Flying Better Together” and a company blog post from Mr. Tilden.
In more detail, the airline calls out the benefits of increasing links between technology markets in Silicon Valley and Seattle and creating more opportunities to link with international partners in Seattle, San Francisco, and Los Angeles. Their aim is to make Alaska Airlines “the go-to airline for the more than 175,000 daily fliers in and out of Golden State Airports.”
Alaska hopes that purchasing Virgin America will open access to slot-controlled markets like Washington National Airport (DCA), JFK, and LaGuardia. However, I think we all know it’s possible that regulators may ask them to give up some slots for competitive reasons if the merger goes through.
I will be enjoying dinner and a show in Siem Reap during the media conference call. But for now I’m interested to see how this plays out. If Alaska can maintain all the features that make it one of my favorite domestic airlines while continuing to grow in new markets, that will be good news.
It’s certainly better than the endless questions from people curious if Delta will buy Alaska. I think this announcement puts those rumors to bed for at least a couple years.
