Feds approve $4 billion Alaska Air purchase of Virgin America

Alaska Airlines acquiring Virgin America

Via Q13 Fox:

The U.S. Department of Justice on Tuesday approved the $4 billion acquisition of Virgin America by Alaska Air Group.

“We couldn’t be more excited about receiving DOJ clearance for our merger with Virgin America,” said Alaska Air Group Chairman and CEO Brad Tilden. “With this combination now cleared for take-off, we’re thrilled to bring these two companies together and start delivering our low fares and great service to an even larger group of customers.”

The deal will make Alaska the 5th-largest airline in the U.S. surpassing JetBlue Airways.

The department required Alaska to make limited changes to its codeshare agreement with American Airlines, saying it will keep Alaska competing with American just as Virgin does today.

“Smaller airlines, such as Alaska and Virgin, provide a critical competitive check on the larger carriers,” said Acting Assistant Attorney General Renata Hesse of the Justice Department’s Antitrust Division.  “Although this merger offers hope that a strengthened Alaska can be an even stronger competitor than before, because of Alaska’s extensive codeshare agreement with the world’s largest airline, the merger threatened to blunt important competition and reduce choices for consumers.  Today’s settlement ensures that Alaska has the incentive to take the fight to American and use Virgin’s assets to grow its network in ways that benefit competition and consumers.”

The government has been in talks with the airlines since the deal was announced back in April.

Alaska hopes to close the transaction soon.

“We remain confident in the merits of this transaction,” Tilden said. “The expanded West Coast presence and larger customer base create an enhanced platform for growth, which is good for investors, employees and especially customers – who benefit from more choices, increased competition and low fares.”

Last year Alaska flew more than 31 million passengers to 112 destinations worldwide with more than $5.5 billion in revenue, while Virgin America flew 7 million passengers to 24 destinations with $1.5 billion in revenue.

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