Alaska Air Group Wins Approval to Buy Virgin America

2016-12-06 23:22:19

 

Alaska Air Group Wins Approval to Buy Virgin America

Alaska Air Group has won antitrust approval for its $2.6 billion acquisition of Virgin America on the condition that it scale back its ticket-selling agreement with American Airlines, the Justice Department said on Tuesday.

The merged company would be the fifth largest United States carrier, after American Airlines, Delta, United Airlines and Southwest Airlines.

Under the settlement, Alaska Air and American would be banned from booking passengers on one another’s flights on routes where Virgin and American now compete, the department said.

The booking partnership would also be barred on routes that Alaska Air might start in the future if American also flies that route.

Alaska, which paid a premium of about 86 percent for Virgin, pursued the deal to better compete against Delta Air Lines and American, the company has said.

The top four airlines control more than 80 percent of the air travel market in the United States, and the Justice Department is hoping that a stronger Alaska Air can compete with the giants.

“Today’s settlement ensures that Alaska has the incentive to take the fight to American and use Virgin’s assets to grow its network in ways that benefit competition and consumers,” Renata Hesse, the acting head of the Justice Department’s Antitrust Division, said in a statement.

The settlement is a good one for Alaska Air because it does not require the company to dispose of any gates, slots or other hard assets, said Robert Mann, an airline analyst at R.W. Mann & Company. “It’s not a material impact on the economics of the deal,” he said.

Virgin America is an offshoot of billionaire Richard Branson’s London-based Virgin Group, which had become famous for its mood lighting and media-rich entertainment on flights.

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