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Bad News: Alaska Airlines Expected To Buy Virgin America

I can’t rationalize a merger between Alaska and Virgin America as much, though. They have completely different fleets, completely different corporate cultures, completely different approaches towards their onboard products, completely different frequent flyer programs, and brand equity which isn’t really combinable.

Well, unfortunately it looks like that’s the merger which is happening.

Alaska Airlines is expected to buy Virgin America in a ~$2 billion deal as soon as the next few days.

Alaska-Seattle

Per The New York Times:

Alaska Airlines is near a deal to buy Virgin America for about $2 billion, a person briefed on the matter said on Saturday, describing a move that would unite two popular smaller airlines in the latest round of consolidation in the industry.

An announcement could come as soon as Monday, said the person, who spoke anonymously and was not authorized to speak about the matter, and who cautioned that details were still being negotiated and the talks could fall apart.

Alaska squared off against JetBlue, with final bids being entered in recent days.

Like I said, I really can’t rationalize this deal, and specifically how Alaska values a takeover of Virgin America more than JetBlue does. Alaska has always been successful because of what a lean, disciplined operation they run. I think with this merger we’re finally reaching the point where airlines are merging “just because,” given that virtually all US carriers are turning profits. But presumably that’s only cyclical, and the economy and/or oil prices will change things up again at some point.

Virgin-America

Last time I wrote about the potential of an Alaska and Virgin America merger, a lot of people thought I was crazy for suggesting it doesn’t make sense. So I figured I’d address a few of the points people disagreed with me on (the quotes in bold are some of the points people made):

Bottom line

It looks like Alaska will be taking over Virgin America, and that it could happen as early as this coming week. But I have to wonder what they’re thinking with this merger. Just about the only thing these two airlines have in common is that they’re smaller carriers. Other than that they’re so different, and not in the sense that they’d complement one another.

Alaska and Virgin America are two brands which a lot of consumers love, but for very different reasons. Unless they plan on running two separate operations, there’s no way they can combine the two brands without losing what makes them special.

HT: One Mile At a Time

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