By MICHAEL J. de la MERCED and LESLIE PICKER
APRIL 2, 2016
Alaska Airlines is near a deal to buy Virgin America for about $2 billion, a person briefed on the matter said on Saturday, describing a move that would unite two popular smaller airlines in the latest round of consolidation in the industry.
An announcement could come as soon as Monday, said the person, who spoke anonymously and was not authorized to speak about the matter, and who cautioned that details were still being negotiated and the talks could fall apart.
Alaska squared off against JetBlue, with final bids being entered in recent days.
Virgin America, which went public in late 2014, shares a name with Richard Branson’s Virgin empire. The British mogul holds a 31 percent stake, while the hedge fund Cyrus Capital Partners owns 24 percent.
Thanks, in part, to lower oil prices, airlines were able to post stronger earnings last year. Virgin America generated almost six times more net income — $340 million — in 2015 than in the prior year and had only about $308 million in debt, according to data compiled by S&P Capital IQ.
Despite its name, Alaska Airlines is based in Seattle and generates most of its business through flights outside Alaska. The company was founded in 1932 and today is a subsidiary of Alaska Air Group, which also operates Horizon Air. The parent company, which has a market valuation of about $10 billion, flew 32 million passengers last year. Alaska Air Group is among a small class of airlines to have an investment-grade rating.
Virgin America is much smaller and newer, having been founded in 2007. The company, based in the San Francisco area, has a fleet of about 60 single-aisle Airbus planes that fly to 23 airports in the United States and Mexico.
News of the state of the discussions was reported earlier by The Wall Street Journal.
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