Alaska Air Group reportedly closes in on $2 billion purchase of Virgin America
Seattle-based Alaska Air Group is close to a $ 2 billion deal to purchase Virgin America, beating out a rival bid from Jet Blue Airways, The Wall Street Journal reported today.
The Journal’s report was based on information from unnamed sources said to be familiar with the matter. Those sources stressed that there was no guarantee Alaska would clinch the deal. An announcement could come as early as Monday, they told the Journal.
U.S.-based Virgin America is separate from Virgin Atlantic, a larger airline owned by British billionaire Richard Branson’s Virgin Group. Branson’s holding company owns less than 25 percent of Virgin America, in accordance with federal law. Cyrus Aviation Holdings is the largest investor with about 28 percent of the voting stock.
Last month, reports started circulating that inside shareholders were unloading Virgin America stock, and that stoked reports that the airline might be for sale. Alaska Air Group, which owns Alaska Airlines and its Horizon Air subsidiary, reportedly put in an offer this week. Jet Blue was said to be doing so as well.
Virgin America’s stock spiked upward sharply this week due to the takeover rumors, bringing the company’s market capitalization to around $ 1.5 billion.
Either Alaska or Jet Blue would benefit by taking over Virgin America’s West Coast routes and reducing competitive pressure.
The deal might be trickier for Alaska than for Jet Blue, due to the fact that Virgin America flies Airbus jets. Jet Blue also uses Airbus; however, Alaska Airlines currently flies Boeing jets exclusively. That could pose challenges for maintenance and crew training if the operations are consolidated – but not so much if they continue to operate independently.