The Alaska & Virgin America Merger Is Expected To Close This Month

In April it was first announced that Alaska would be taking over Virgin America in a ~$2.6 billion deal. We still don’t actually know what the future of Alaska and Virgin America will look like in terms of branding, and it sure seems like Alaska doesn’t know either, as they’ve gone back and forth.

For a while Alaska had set a deadline of October 17, 2016, for the deal to close. However, prior to that date we learned that there would be a delay. It later became apparent that the reason for this was that the DOJ was concerned about the merger reducing competition too much, and they wanted some concessions from the new merged airline.

Rumor had it that the DOJ was asking Alaska to cut codesharing ties with either American and/or Delta, to ensure that sufficient competition remains. On top of that, the DOJ is allegedly also asking the new airline to give up several gates in both Los Angeles and San Francisco. Combined, these changes could cost Alaska hundreds of millions of dollars in revenue per year, so you have to wonder how they’re feeling about the deal now.

Anyway, for the past several weeks Alaska has been negotiating with the DOJ, and the only official update we’ve received is that the airlines are making good progress, and that they’re still committed to the deal.

Per Bloomberg, apparently Alaska is close to reaching a settlement with the DOJ, and the deal should close by the end of November:

Alaska Air Group Inc. is close to reaching a settlement with U.S. antitrust officials that will allow it to complete its proposed acquisition of Virgin America Inc., according to people familiar with the matter.

The settlement with the Justice Department’s antitrust division should be announced by the end of November, said one of the people. The people declined to be named because the negotiations are confidential. Details of the settlement couldn’t be learned.

With Thanksgiving coming up this week, it’s going to be interesting to see the timing of this. I have the feeling that Alaska and Virgin America are going to be offering some level of reciprocity for passengers from the start, so this isn’t something that could easily be announced on Thursday (at least that’s my speculation). Who knows, maybe the deal will close tomorrow, or maybe it’ll close the Monday after.

Either way, it’s good to know that the deal is nearing completion.

Bottom line

It sounds like the deal between Alaska and Virgin America should close in the next week or so. On one hand I’m happy that the waiting period will be over, though at the same time I was quietly hoping that this would cause the deal to fall through, given that I think the two airlines have more to offer independently rather than together.

Now I’m just curious to see how quickly Alaska and Virgin will offer reciprocal benefits.