Alaska Air reaches for sky with Virgin America deal
Alaska Air ’s $2.6bn takeover of Virgin America brings together two airlines enjoying solid profits to create the US’s fifth-biggest carrier by revenues. The deal not only contrasts in the health of the airlines involved — in the last big US airline merger between US Airways and American Airlines in 2013, American was in Chapter 11 bankruptcy protection. It also contrasts in price. The $57-a-share price is 110% above the company’s share price in February and far above expectations as recently as last week. Virgin’s shares surged 41.6% to $55.09 by lunchtime in New York. Yet it is far from clear that the merger of Alaska — the US’s sixth-biggest carrier by revenues — and Virgin — ninth biggest — will give Alaska the edge that its senior executives are seeking. Brad Tilden, Alaska’s CE, said the deal complemented Alaska’s route network. Alaska, based in Seattle, is strong in Alaska, Washington and Oregon, while Virgin’s main operating bases are San Francisco and Los Angeles. “We’re in a position here where we felt it was maybe the one-time opportunity to really get a much stronger foothold in California,” Tilden said. “It’s really valuable real estate and it gives us a shot at being your go-to airline if you live anywhere up and down the west coast.” However, George Hamlin, head of Hamlin Transportation Consulting, said it was unclear what Alaska was acquiring. Virgin’s 60 A319 and A320 aircraft are mostly leased, while the airline has a diffuse route structure, lacking dominant positions. Virgin serves 18 cities in the US and three in Mexico. “They don’t have really significant concentrations anywhere,” Hamlin said.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2016-04-05/unaligned/alaska-air-reaches-for-sky-with-virgin-america-deal
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Alaska Air reaches for sky with Virgin America deal
Alaska Air ’s $2.6bn takeover of Virgin America brings together two airlines enjoying solid profits to create the US’s fifth-biggest carrier by revenues. The deal not only contrasts in the health of the airlines involved — in the last big US airline merger between US Airways and American Airlines in 2013, American was in Chapter 11 bankruptcy protection. It also contrasts in price. The $57-a-share price is 110% above the company’s share price in February and far above expectations as recently as last week. Virgin’s shares surged 41.6% to $55.09 by lunchtime in New York. Yet it is far from clear that the merger of Alaska — the US’s sixth-biggest carrier by revenues — and Virgin — ninth biggest — will give Alaska the edge that its senior executives are seeking. Brad Tilden, Alaska’s CE, said the deal complemented Alaska’s route network. Alaska, based in Seattle, is strong in Alaska, Washington and Oregon, while Virgin’s main operating bases are San Francisco and Los Angeles. “We’re in a position here where we felt it was maybe the one-time opportunity to really get a much stronger foothold in California,” Tilden said. “It’s really valuable real estate and it gives us a shot at being your go-to airline if you live anywhere up and down the west coast.” However, George Hamlin, head of Hamlin Transportation Consulting, said it was unclear what Alaska was acquiring. Virgin’s 60 A319 and A320 aircraft are mostly leased, while the airline has a diffuse route structure, lacking dominant positions. Virgin serves 18 cities in the US and three in Mexico. “They don’t have really significant concentrations anywhere,” Hamlin said.<br/>
