Monday, September 12, 2016

Lawsuit seeks to keep Alaska Airlines from acquiring Virgin America

A group of 42 consumers is suing to prevent Alaska Airlines from purchasing Virgin America.

Alaska Airlines announced plans in April to buy Virgin America. The deal is scheduled to be completed by December. Both airlines fly to Hawaii.

In a lawsuit filed Wednesday in U.S. District Court in San Francisco, the plaintiffs described the deal as “substantial and foreboding” and said it contributed to a growing trend of mergers involving large airlines, according to a story in the Las Vegas Sun.

Such mergers increase costs for fliers while eliminating expansion, decreasing the number of available seats on flights and reducing the variety of travel destinations, plaintiffs’ attorney Joe Alioto told the newspaper.

Contacted by Pacific Business News, Alioto said he filed a motion Thursday seeking a preliminary injunction that would halt the acquisition until the lawsuit is decided.

While Alaska Airlines is a good carrier, it's vital that Virgin America remain in business with other low-cost airlines, he said.

"Their competition is extremely important if there's going to be any competition in the airline industry," he told PBN.

The plaintiffs are seeking a court order prohibiting the $4 billion ongoing acquisition, which includes Alaska Airlines paying $2.6 billion in cash and assuming $1.4 billion in current debt and leases.

Last week, Alaska Airlines announced its intention to cut about 225 Virgin America management positions as part of the merger.

Alaska Airlines, based in the Seattle area, has 157 aircraft and 880 average daily flights. San Francisco-based Virgin America has 63 aircraft and makes about 200 daily flights.

(James Ptichard - Pacific Business News)

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