Virgin America Deal with Alaska Air
Alaska Air has announced their plan to buy Virgin Airlines for a deal of two billion US dollars. Soon after, another player, Jet Blue, is reported to have entered the bidding, although the former is expected to come out as the victor.
If Alaska Airlines accepts the deal, a major consolidation of two major airline companies would form. Both airlines will be able to use each other’s bases in North America and Mexico.
Virgin Airlines deal may significantly boost Alaska Air financially. Jumpstarted by Richard Branson in 2007, Virgin America became public in 2014, and has seen a profit of 191 million as of the latest quarter. This is an increase of 600% from the previous yearly profit of 28 million. According to the stock market, stock in Virgin Airlines has increased to about 33% with the leading investor to be Cyrus Holdings at 27.4%.
Destination bases will be added to the airline schedule. Alaska Airlines, for instance, would have a more frequent presence in the metropolitan cities of Los Angeles and San Francisco. San Francisco is the main headquarters of Virgin America.
Currently, the boards of both airlines have approved the deal, yet shareholders in Virgin America still are required to approve the statement.