In the airline business, post-merger integrations are multiyear affairs, making it impossible to pinpoint when two combining carriers become one. In the case of Alaska Airlines and Virgin
America, the history books will note sometime in
2018 as when the two airlines began to look and
feel like one. Among the year’s key milestones: integrated airport operations, a single reservations system
and the all-important single operating certificate.
With most of the
2019 should be when
the next, and most
important, post-merger phase begins
to gain critical mass.
“We believe that
we passed through an infection point
in the last few months,” Alaska president
and CEO Brad Tilden said at the company’s investor day in late November.
“We’re now moving to harvest time and
to realizing the benefts of this merger.”
Alaska’s purchase of Virgin, announced in April 2016 and approved
by shareholders and regulators in eight
months, instantly created a larger airline. Adding Virgin increased Alaska’s
daily departures and annual passengers
by about 20% and boosted annual revenue 25%. Te combined airline is a
solid ffth in total annual domestic seats,
a Delta Airport Consultants analysis
showed, leapfrogging New York-based
JetBlue Airways and trailing only the
US market’s dominant four: American
Airlines, Delta Air Lines, Southwest
Airlines and United Airlines.
None of this, however, explains why Alaska paid a
premium for Virgin, outbidding JetBlue in the process.
Alaska’s $2.6 billion all-cash purchase price—$57 per
share, 30% higher than Virgin’s shares closed the day
the deal was inked—refected Virgin’s quality more
than its size. Virgin’s network was built on a foundation of serving large US commercial markets. Te
carrier’s route network included 12 of the top 20 US
on the New
With Virgin America in the fold, Alaska
Airlines says the merger’s benefits are
set to take off. BY SEAN BRODERICK