Alaska Air Group Inc. is nearing a
deal to acquire Virgin America Inc. the ninth largest US Airline by passenger
traffic, for more than $2 Billion, having outbid JetBlue Airways Corp. The acquisition
would herald the first US commercial airline merger since US Airways and
American Airlines combined in 2013 to form the world’s largest carrier.
It would boost the size of Alaska
Air home market by allowing it to expand into lucrative hubs such as San
Francisco and Los Angeles. Alaska Air is set to pay between $56 and $58 per
share to acquire Virgin America. California based Virgin America went public in
the US stock market in 2014 as an offshoot of London based Virgin Group.
Launched as low cost US Airline, it became famous for its mood lighting,
comfortable leather seats and media rich inflight entertainment system.
Based in Seattle, Alaska Air and
its partner regional Airlines serve more than 100 cities in the United States,
Canada, Costa Rica, and Mexico. It has a market capitalization of $10.2 Billion.
Virgin America accounts for about 1.5 percent of US Domestic flight capacity,
while Alaska Air and its subsidiary Horizon Air account for 5 percent. JetBlue
accounts for 6 percent. Mega-mergers in the past decade have reduced the US
industry to four top players that control more than 80 percent of the market.
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