Alaska’s parent company, Alaska Air Group, which also owns Horizon Air, will pay more than $2 billion for Virgin America in a purchase that substantially boosts its access to major California airports.
The deal was still being negotiated Sunday and will be announced Monday if it is finalized, according to the New York Times.
Such a transaction would surely attract considerable attention from regulators, who seem anxious to preserve dwindling competition in the airline industry, which is down to only four major carriers.
The potential for regulatory scrutiny might have encouraged major carriers to back off from trying to acquire Virgin America, which put itself up for sale last year, leaving only JetBlue and Alaska, the fifth- and sixth-largest U.S. airlines by passenger count, in the competition, the newspaper said.
But JetBlue apparently could not match the final offer from Seattle-based Alaska, considered the financially soundest of U.S. airlines.
Alaska also contended during the competition that it was better-suited to acquire Virgin America because it had fewer overlapping routes than JetBlue and would have to sell fewer airport slots, the newspaper said.
But the transaction, if finalized, still will face scrutiny from regulators concerned about declining competition and higher ticket prices.
The U.S. Justice Department recently went to court in an effort to block American’s takeover of US Airways but lost.
Although Virgin America uses the “Virgin” corporate name, Branson only owns 31 percent of the airline, the newspaper said.
The Cyrus Capital Partners hedge fund owns 24 percent of the airline, which is separate from Virgin Atlantic Airways.
