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Alaska Airlines just confirmed its plans to acquire Virgin America in a post on… Instagram.
According to a CNBC report, Alaska will purchase Virgin for $57 per share in a deal that’s valued at roughly $4 billion in total, including debt, beating the top offer of bidding war partner JetBlue. That’s a HUGE jump over Virgin America’s public valuation of $1.48 billion as of Friday, based on its share price of $38.90. Shares are Virgin are up nearly 35% in pre-market trading, to $52.25 per share. That’s still shy of Alaska’s purchase price, so the stock may continue to climb throughout the morning.
The all-cash deal, which was apparently signed Friday night following a bidding war that may have put Marriott/Anbang/Starwood to shame, was expected to be announced today. According to a WSJ article, JetBlue backed off once the bidding jumped too high.
Once combined, Alaska and Virgin will make up the country’s fifth most popular airline by traffic, unseating JetBlue, which currently ranks #5. Alaska would also get hubs at two key West Coast airports — Los Angeles (LAX) and San Francisco (SFO) — and a fleet of Airbus A320s (which may ultimately present a challenge for Alaska, which currently operates only Boeing 737 aircraft).
As for consumers, passengers will have fewer airline options following the merger, of course, but there’s no question that Virgin’s fleet represents an upgrade for Alaska flyers, with its high-tech cabins, comfier seats and superior catering options. Alaska, meanwhile, offers an arguably more comprehensive frequent-flyer program, giving current Virgin elites an opportunity to earn and redeem miles on a variety of US-based and international carriers.
What do you think of an Alaska/Virgin America merger?
Alaska miles are extremely valuable because you can book awards on partners like Emirates, Icelandair, Korean Air and Japan Airlines. The current bonus of 30,000 miles can book you a roundtrip ticket on Alaska Airlines from Boston to San Diego or New York to Seattle, for example.
- Special Introductory Offer: Buy 1 ticket, get 1 for just the taxes and fees with Alaska's Famous Companion Fare™ Offer.
- Get 30,000 bonus miles after you make $1,000 or more in purchases within the first 90 days of your account opening.
- Enjoy another Alaska's Famous Companion Fare™ every year from $121 ($99 plus taxes and fees from $22) on your account anniversary valid on Alaska and Virgin America flights booked on alaskaair.com.
- Save with a free checked bag on Alaska and Virgin America flights for you and up to six other passengers on the same reservation.
- Earn 3 miles for every $1 spent directly on Alaska Airlines and Virgin America purchases and 1 mile for every $1 spent on all other purchases. No foreign transaction fees.
- There are two types of cards: the Visa Signature® card and the Platinum Plus® card. The card you receive will be determined by several factors including your income and credit history.
- The benefits and bonus miles above apply to Visa Signature cards only. The Annual Fees, benefits and bonus miles for Platinum Plus® cards are different.
- For more information on the differences, see the Features section accompanying the application.