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PREPARE FOR CONSOLIDATION

Alaska Air is close to buying Virgin America for $2 billion, beating JetBlue

Reuters/ Fred Prouser
Good news for Virgin Group’s founder, billionaire Richard Branson.
  • Olivia Goldhill
By Olivia Goldhill

Science reporter

This article is more than 2 years old.

Alaska Air has beaten rival bids to acquire Virgin America, according to the Wall Street Journal.

Though the deal is not yet finalized, WSJ reports that Alaska outbid a rival offer from JetBlue. The deal could be finalized by Monday, April 4.

Virgin America has a market value of around $1.5 billion, but Alaska is expected to pay at least $2 billion in the deal.

The competing bids comes after US airline groups have consolidated in recent years. Between 2008 and 2013, the number of major carrier in the US halved, from eight to four. The four largest carriers in the US now control more than 80% of the domestic market.

Smaller airlines have thrived in more niche routes but, since oil prices have plummeted, the major airline groups are increasingly able to compete, squeezing smaller companies out of these less popular routes.

Merging with Virgin America was an attractive option to both Alaska Air and Jet Blue, at a time when small companies are struggling in a market dominated by just a few major airlines.

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