On April 4th, 2016, David Kaminski Morrow released an article on Flight Global which talks about how Alaska Air Group acquired Virgin America. The two reached an agreement that the US budget carrier Virgin American was acquired for about $4 billion. Alaska Air Group is the parent company of Alaska Airlines.It is said that both carriers had their boards unanimously approve of this acquisition.
In terms of payments, here’s how it’s going to work. Alaska Air Group agrees to pay $2.6 billion worth of equity in cash to Virgin America based on their $57 per share value. The rest of the money will be from debt that is calculated from Virgin America. Not only this but more of the money will be capitalized in aircraft operating leases.
With this acquisition, it is predicted by the boards that the company’s revenue will increase by over 25% which is over$7 billion. Because of this, the acquisition will be considered accretive to adjust earnings per share within the first full year.
Here’s what Alaska Air Group has to say about the acquisition.
““With an expanded West Coast presence, a larger customer base, and an enhanced platform for growth, Alaska Airlines will be positioned to provide more choices for customers, increase competition and deliver attractive returns to investors.”
It can be noted that this operation will allow for more growth opportunity within the company. It will allow for more accessed to airports such as New York LaGuardia, New Yok JFK, and Washington National which are all locations on the east coast.
When Virgin America fully is acquired by Alaska Air Group, the group will have a combined fleet of over 280 aircrafts which will allow the company have a combined total of over 1,100 departures daily. Hubs will be near Los Angeles, Anchorage, Portland, San Francisco, and Seattle.
Brad Tilden, chief of Alaska Air Group, talks about expanding their business in California more.
“With our expanded network and strong presence in California, we’ll offer customers more attractive flight options for non-stop travel.”
The goal for the near acquisition is to
“focus on an outstanding travel experience.”