16 Responses

  1. Joelfreak
    Joelfreak at |

    Could this be offense by defense? If b6 got them, as would be left with only ha as a way to expand domestically… Maybe they thought this was the only way to play with the big boys…

  2. Jason
    Jason at |

    That’s a tremendous amount to pay on the surface. But let’s think about today’s fuel costs. Right now represents a huge opportunity for carriers to expand and make a lot of money because fuel is so low. The problem is no one can get their hands on more planes and more importantly the crews in the short term outside of M&A. Let’s assume for a second that Alaska is going to draw down the SFO hub. All of a sudden you have 55 A320s to expand operations from mainly SEA and LAX to profitable low competition markets. I could see IND, CVG, STL, CMH and RDU getting new service with the redeployed equipment.

    People need to remember why VX was struggling. It wasn’t their cost structure because it was fairly low. It was because they wanted to fly the glam hip routes that already had 3-4 incumbent carriers competing. You can’t make money like that. They need some routes where competition is low or non-existent like CVG-LAX or IND-LAX. Until F9 announced they were going to start 4x weekly service, Delta had no competition on the CVG-LAX route. The flights are high priced typically and DL fills a 738 twice a day. Same with SFO once per day.

    If Alaska looks to absorb the VX equipment and crew into their system and make it bigger than it will be a great acquisition. But if AS says they’re going to try to keep doing what VX was failing at namely maintaining the SFO hub, it won’t be pretty when fuel returns to higher levels. This acquisition is about making money right now and if they can string together a couple years of $1-2B profits they won’t care they overpaid by as much as they have.

  3. It's official: Alaska buys Virgin America for... wait, HOW much?!? - Points with a Crew

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  4. How to play the Alaska / Virgin America deal - Frequent Miler

    […] official.  Alaska Airlines is buying Virgin America.  And, the question on my mind, of course, is how can we make the most of […]

  5. Greg
    Greg at |

    Alaska just got more attractive as an acquisition target of AA/DL/WN by locking up the West Coast

    1. Better By Design
      Better By Design at |

      With the Big 4 controlling 85%+ of US capacity, it’s very unlikely that any of them will be merging or buying a smaller airline.

  6. Kush Patel
    Kush Patel at |

    What licensing fee?

    Also, I can imagine this buy-out pleasing Boeing too much as Alaska was proudly an ‘All Boeing Airline’.

    1. Andrew
      Andrew at |

      VX pays the Virgin Group 0.7% of their operating revenue as a licensing fee for the Virgin brand.

      1. Jason
        Jason at |

        All Boeing except for the Bombardier turboprops at Horizon and the Embraer and Bombardier RJs Skywest flies for them.

        1. Better By Design
          Better By Design at |

          Besides, it’s a safe bet they’ll be transitioning to an all 737 fleet as the VX leases expire.

  7. Oliver2002
    Oliver2002 at |

    All the VX A320 are leased and can be disposed off in 2-3 years. I’m sure Boeing has plenty of 737NGs to sell.

    1. Better By Design
      Better By Design at |

      Yes, exactly! It’ll be a financial and (secondarily) rebranding question for Alaska to figure out the transition; the operational side is not as hard as people make it out to be.

  8. More Mint, more fun coming to JetBlue - Runway GirlRunway Girl

    […] is not taking the Virgin America/Alaska Airlines merger lightly; there are indications that the company plans to expand its popular Mint premium service to […]

  9. Alaska Takes Virgin America, Trans-Siberian, Poison Squad - TravelBloggerBuzz

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  10. Nick
    Nick at |

    I think the Virgin America
    brand is stronger than Alaska and has more upside and growth potential in the California and east coast markets – they should use that for the combined airline. I’m guessing they won’t though.