Alaska Air Group today announced it has closed its acquisition of Virgin America.
The definitive merger agreement, which was signed in April and approved by Virgin America shareholders in July, 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 Airlines and Virgin America will spend the next year working to secure Federal Aviation Administration (FAA) certification to allow the two airlines to operate as a single carrier (with regional sister carrier Horizon Air remaining on its own separate operating certificate).
“Alaska Airlines and Virgin America are different airlines, but we believe different works – and we’re confident fliers will agree,” said Brad Tilden, CEO of Alaska Air Group. “Together, we’ll offer more flights, with low fares, more rewards and more for customers to love, as we continue to offer a distinctive travel experience. The two airlines may look different, but our core customer and employee focus is very much the same.”
Today, Alaska Air Group boasts nearly 1,200 daily flights to 118 destinations, the most seats on flights from the West Coast and more than $7 billion annual revenues. Alaska Air Group will continue to provide customers the low fares, unmatched reliability and award-winning service they’ve come to enjoy while offering a convenient schedule of flights to even more of the places they want to fly. Soon Virgin America customers will have access to a route network that offers six times more daily flights than before.
“This partnership is positive for California air travel consumers and demonstrates an investment in our state,” said Gavin Newsom, Lieutenant Governor of California. “Both airlines boast a strong history, and we look forward to seeing their innovative spirit magnified with their global international network of partner airlines.”
The combination expands service and provides more frequent connections to international airline partners in thriving technology markets in the Bay Area, Los Angeles and Seattle. Together, the airlines offer 289 daily flights to 52 destinations from California, including 113 daily nonstop flights to 32 destinations from three Bay Area airports and 105 daily nonstop flights to 37 destinations from four Los Angeles area airports.
In addition, the combination opens up growth opportunities in important East Coast business markets by increasing Alaska Air Group’s access to high-demand airports like Ronald Reagan Washington National Airport and the three primary New York City-area airports: John F. KennedyInternational Airport, LaGuardia Airport and Newark Liberty International Airport.
No decisions regarding the Virgin America brand have been made. Alaska plans to continue to operate the Virgin America fleet with its current name and product for a period of time while it conducts extensive customer research to understand what fliers value the most. Virgin America will continue to fly under its brand with no immediate changes to the onboard product or experience.
“We appreciate that there is great interest in the future of the Virgin America brand among customers and employees alike,” said Tilden. “This is a big decision and one that deserves months of thoughtful and thorough analysis. We plan to make a decision about the Virgin America brand early next year.”
“Culture has been a real challenge in many mergers, so we’re working to do things differently,” said Ben Minicucci, Alaska’s president and COO who will also become CEO of Virgin America today. “We are being very thoughtful about culture and are working to create an environment that reflects who we are and where we’ve been, that also enables us to work together, be bold, and succeed in a rapidly evolving industry.”
To celebrate the merger of two beloved West Coast airlines, Alaska leaders will join employees from Virgin America, Alaska Airlines and Horizon Air later this morning at San Francisco International Airport for the unveiling of a co-branded Boeing 737 featuring a special, one-time livery painted in shimmering red, purple and blue. The aircraft features the slogan “More to love” and will fly throughout Alaska Airlines’ route network starting today, in celebration of the increased customer benefits of the combination.
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. Peter Hunt, previously Virgin America senior vice president and chief financial officer, will serve as president of the Virgin America subsidiary, reporting to Minicucci. Hunt will be based in the company’s Burlingame, California regional headquarters. Both Minicucci and Hunt’s positions are effective today and remain in effect until the airlines obtain a single operating certificate from the FAA, expected in early 2018.