The Wall Street
Journal on Saturday reported that Alaska Air was nearing a $2 billion deal
to acquire Virgin America, beating out a rival bid from JetBlue. According to
an unnamed source “familiar with the situation,” the arrangement could still fall
apart. The source, not authorized to speak on the matter, said an
announcement could come as early as Monday from Alaska if the carrier clinches the deal.
Virgin America boasted a strong balance sheet for 2015 and
closed Friday’s market valued at about $1.5 billion. The premium Alaska Air may
be willing to invest in its target would underscore its expansion efforts
beyond its hometown, Seattle, where it has faced recent marketshare pressure
from Delta Air Lines consolidating a West Coast base. A tie-up with Virgin
America would bring Alaska Air an additional 60 fleet along with routes between 23
cities in the United States and Mexico. On the West Coast alone a Virgin America acquisition would more
than triple Alaska Air’s seat capacity at San Francisco International Airport
and more than double it at Los Angeles International Airport.
Any agreement between Alaska Air and Virgin America would be subject to regulatory approval.