Alaska Airlines closed acquisition to buy Virgin America, the group announced on Wednesday.
The merger of Alaska and Virgin would combine the nation’s sixth- and ninth-largest airlines, respectively, to create the fifth-largest U.S. carrier; it makes Alaska the biggest carrier on the West Coast.
What led up to the merger
Seattle-based Alaska Airlines announced its $2.6 billion deal in April after the merger agreement was signed by Virgin shareholders, reigniting the debate over airline consolidation. It gives Seattle-based Alaska a foothold in key airports in New York and Washington D.C., increasing the airline's appeal to business travelers.
The Department of Justice cleared Alaska's acquisition last week, but it announced Alaska would be required to significantly reduce the scope of its codeshare agreement with American Airline – the world's largest airline – in order for Alaska to complete the deal.
The department said that these modifications will ensure that Alaska will have the incentive to vigorously compete with American as Virgin does today.
What airlines call the appeal of the merger
In its news release on Wednesday, Alaska wrote the merger brings together two of the country's favorite airlines into a unified force that will provide an attractive alternative to the "Big 4" airlines that currently control 84 percent of the domestic market.
Alaska said the deal will add Virgin's 200 daily departures to its existing 1,000 daily flights. The airline currently serves 112 destinations in the U.S., Canada and Mexico.
Virgin quickly won over passengers with its new jets, friendly crews, trendy mood lighting, extensive
seatback entertainment systems and meals on demand. All of that could go away if Alaska
chooses to fly a uniform fleet, a decision company executives say they were still debating in the spring.
No decisions regarding the Virgin America brand have been made as of Wednesday. Virgin America will continue to fly under its brand with no immediate changes to the onboard product or experience.
Alaska fliers are just as loyal, loving the airline's compassion. Like other carriers, it charges for bag fees but was the first to add a service guarantee: if a bag doesn't make it to the claim area within 20 minutes, fliers get $25 off a future trip or 2,500 bonus miles.
Here's what the airline highlighted for passengers:
The combined company will be led by Alaska Air Group CEO Tilden. Ben Minicucci will serve as chief executive officer of Virgin America in addition to his role as chief operating officer and president of Alaska Airlines.
Cox Media Group