Alaska Air Agrees to Buy Virgin America in $2.6 Billion Deal – Bloomberg

Alaska Air Group Inc. agreed to buy Richard Branson-backed Virgin America Inc. for $ 2.6 billion, according to a statement Monday.

Alaska Air will pay $ 57 a share for Virgin America stock, with the deal worth about $ 4 billion including debt and capitalized aircraft operating leases, it said.

Virgin America's market value was $ 1.37 billion on March 22, a day before Bloomberg News reported that the Burlingame, California-based company was reaching out to potential buyers.

The combination will expand the footprint of Alaska Airlines in California and boost its ability to compete with the top four U.S. carriers, the Seattle-based company said. It will also enhance Alaska's access to slot-constrained East Coast hubs including John F. Kennedy International Airport and LaGuardia in New York and Ronald Reagan Washington National.

Alaska Air had been competing with New York-based JetBlue Airways Corp. for Virgin America after the Branson company put itself up for sale, people familiar with the matter have said.

The combination extends a consolidation wave that began in 2005 and eventually swept up five of the 10 biggest U.S. carriers. Four operators — American Airlines Group Inc., United Continental Holdings Inc., Delta Air Lines Inc. and Southwest Airlines Co. — now control 80 percent of the U.S. market.