Wednesday, December 7, 2016

Virgin America's Acquisition By Alaska Airlines Gets Approval From The Department Of Justice

Alaska Air Group's acquisition of San Francisco-based Virgin America has been stuck in limbo for the last few months as the Department of Justice mulled approving of the deal. Originally, clearance was supposed to pass on September 30th but that deadline languished pending further deliberation. Now, Alaska's takeover of the smaller carrier has finally received approval from the antitrust division of the DOJ.

Alaska Air Group, the parent of Alaska Airlines, announced the deal in a release on Tuesday afternoon.

With regulatory approval, Alaska Air Group can proceed with finalizing the transaction, which it plans to conclude "very soon."

As to how the two airlines will operate once the transaction is completed, few details have been published. One consideration, however, will be the relationship that Alaska has with many of its partners moving forward. Right now, the airline enjoys the benefit of multiple carrier partnerships including code-shares and loyalty benefits across and impressive spectrum of airlines and alliances. With the addition of Virgin America's network, however, that dynamic may need to change.

According to Bloomberg, many of the code-share flights between Alaska and American Airlines had to be given up for regulatory approval because of DOJ concerns over lack of competition on those routes. Alaska Air Group, however, maintains that "the majority of Alaska and American code-share flights will remain intact" in its release.

It's also unknown what will happen to Virgin America's current management team or its headquarters in Burlingame, California. In August, Alaska warned Virgin America's staff to expect layoffs, however, the extended takeover may have put some of those plans on hold.

Once the transaction concludes, many expect light to shed on most of these mysteries -- including the future of Virgin America's industry-leading in-cabin product -- in short order. Until then, Alaska is remaining tight-lipped on how the carriers will merge.

(Grant Martin - Forbes)

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