Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Antitrust Division sends Alaska Air, Virgin America requests for more info, (May 17, 2016)
Organizations Mentioned:Alaska Air Group | U.S. Department of Justice
By Michael Menzhuber, J.D., LL.M.
Alaska Air Group, Inc., parent company of Alaska Airlines, and Virgin America have each received a request for additional information from the Antitrust Division of the United States Department of Justice in connection with Alaska’s proposed acquisition of Virgin America, the carriers announced today.
On April 4, 2016, the two airlines announced that the boards of directors for Alaska and Virgin America had approved unanimously a definitive merger agreement, under which Alaska Air Group would acquire Virgin America. The aggregate transaction value, which includes existing Virgin America indebtedness and capitalized operating leases, is approximately $4 billion. The proposed acquisition, which will make Alaska the fifth largest U.S. airline, will combine Alaska Airline’s well-established core markets in the Pacific Northwest and the state of Alaska with Virgin America’s strong foundation in California.
Together, the combined airline will supposedly have:
1,200 daily departures with hubs in Seattle, San Francisco, Los Angeles, Anchorage, Alaska, and Portland, Oregon;
approximately 280 aircrafts, which includes regional planes, with an average age of 8.5 years; and
Virgin America’s fleet of 60 Airbus A319 and A320 aircrafts, which have three classes of service, in-flight WiFi, power outlets, and personal, touch-screen seatback entertainment.
Alaska and Virgin America disclosed that they will be responding promptly to the request, which is a standard part of the Justice Department review process. The two airlines are confident that they will obtain regulatory approval and “complete their pro-competitive and pro-consumer transaction no later than January 1, 2017.”
The proposed acquisition is also subject to approval of Virgin America’s shareholders in addition to the satisfaction of other customary closing conditions, including expiration or termination of the waiting period under the Hart-Scott-Rodino Act.
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