Virgin America purchased by Alaska Air for $2.6 billion

Alaska Airlines
Alaska Air Group has come to terms to buy Virgin America for $2.6 billion, the airlines announced on Monday morning.

Alaska Air will pay $57 per share following a giant leap in Virgin America’s stock price after it announced two weeks ago that it would seek out a buyer for its American operations.

Including debt and aircraft leases, the transaction is worth about $4 billion.

Once combined the two airlines will operate about 1,200 daily departures while controlling 280 aircraft.
The airline will run hubs in Seattle, San Francisco, Los Angeles, Anchorage, Alaska, and Portland, Oregon.

Alaska Air was reportedly involved in a bidding war with fellow regional airline JetBlue.

The acquisition will mark the eight largest US-based airline in terms of traffic.

“I would be lying if I didn’t admit sadness that our wonderful airline is merging with another,” founder Richard Branson said on Monday.

As of December 2015, Branson’s Virgin Group owned 18.2% of the airline. New York hedge fund Cyrus Holdings has a 27.9% stake.

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Branson said he was “sadly” unable to stop the takeover because some of his shares were non-voting.

“The important thing now is to ensure that once Alaska witnesses firsthand the power of the brand and the love of Virgin America customers for our product and guest experience, they too will be converts,” he added.

Last quarter, Virgin America reported a $191 million profit, compared to $28 million in the same quarter one year prior.

Virgin America flies to 22 destinations in the US and Mexico.

Alaska Air is based in Seattle and travels to more than 90 cities in the US, Canada and Mexico.