Alaska Air agrees to acquire Virgin America worth US$ 4billion


    MONDAY: Updated news bring in latest information about an agreement laid forward by Alaska Air Group to acquire Virgin America worth US$ 4 billion -in order to become fifth largest airlines of United States. As per deal policy, Alaska would acquire Virgin America with an estimate count of $57/share.

    (The first U.S. commercial airline merger since U.S Airways and American Airlines combined in year 2013)

    The deal is also believed to enable Seattle-based Alaska to expand into lucrative hubs such as San Francisco and Los Angeles. Board members of both the companies solely signed on the agreement.

    INSIGHT: Alaska and its partner regional airlines, which in total account for about 5% of US domestic flight capacity, serve more than 100 cities in the US, Canada, Costa Rica and Mexico. In year 2014, Virgin America was accounted for about 1.5% U.S. domestic flight range, on U.S. Stock market.

    On the Virgin Group corporate website, Branson lamented selling off Virgin America, but called it inevitable:

    “I would be lying if I didn’t admit sadness that our wonderful airline is merging with another. Because I’m not American, the US Department of Transportation stipulated I take some of my shares in Virgin America as non-voting shares, reducing my influence over any takeover. So there was sadly nothing I could do to stop it.” – Sir Richard Branson’s blog

    The deal will bring together Virgin’s 60 Airbus A320s with Alaska’s Boeing 737s and Bombardier Q 400s, for a total fleet of about 280 operating a combined 1,200 daily departures.

    “With our expanded network and strong presence in California, we’ll offer customers more attractive flight options for non-stop travel.” – Alaska Air Group’s chairman and CEO, Brad Tilden

    Exclusive estimates obtained from BBC reported Virgin America shares to have surged 40% to US$ 54.52 – bearish to offered price – during early trading. Meanwhile, Alaska plunged 4.7% to $ 78.15.

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    Zac Berry is presently a full time editor at Market Morning. He covers the M&As and follows live market commentary. Before joining Markets Morning, Zac Berry worked with a start-up, where he worked in the capacity of a Team Leader tracking company events and results. Born in the U.A.E, he spent most of his growing up years in Dubai. Currently, he resides in U.S. and is pursuing his charter in Accountancy.