Virgin America acquired in $2.6 billion deal


A rival airline announced Monday that it is buying Burlingame-based Virgin America for $2.6 billion.

The 8-year-old airline is being acquired by Alaska Air Group, whose Alaska Airlines will become the fifth-largest airline in the U.S., Alaska Air officials said.

The combined entity, which will remain in its Seattle headquarters, will have 1,200 daily departures. The airline will host more than 175,000 daily fliers in California airports, Alaska Air officials said.

The new Alaska Airlines will have about 280 aircraft after adding Virgin America’s fleet of 60 planes. The existing loyalty memberships of the latter airline will also be folded into Alaska Airlines’ program.

Integrating Virgin America into Alaska Airlines will cost between $300 million and $350 million, with the combined airline projected to bring in more than $7 billion in annual revenues, airline officials said.

The transaction is expected to be complete with approval from regulators by no later than Jan. 1, 2017, airline officials said. Debt included, Alaska Air values the overall deal to be worth about $4 billion.

Brad Tilden, CEO and chairman of Alaska Air, said in a statement:

“Our employees have worked hard to earn the deep loyalty of customers in the Pacific Northwest and Alaska, while the Virgin America team has done the same in California. … Together we will continue to deliver what customers tell us they want: low fares, unmatched reliability and outstanding customer service.”

David Cush, Virgin America CEO and president, said he believes his company was “changing the industry for the better” and that the combined airline will continue the original airline’s work.

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