Why an Alaska Airlines / Virgin America Merger Makes Sense as JetBlue Gets Outbid

Much has been written about why JetBlue is the perfect suitor for Virgin America, but The Motley Fool shares three reasons why they feel that an Alaska/Virgin America merger would be a solid paring as well. Especially relevant given today’s news that Alaska has supposedly outbid JetBlue with a deal announcement coming as early as Monday.

Fleet operational planning – Yes, Virgin has 50 A320s and 10 A319s, but it’s a homogeneous fleet of only two models, similar to Alaska’s focus on one model – the B737. As Virgin America would likely operate separately from Alaska, the fleet commonality isn’t an actual issue and there would still be only a handful of plane types to help minimize costs.

West Coast capacity outside of Seattle – Alaska would benefit from having additional capacity outside of Seattle where it continues to battle with Delta. As Alaska looks to expand eastward, Virgin’s coast-t0-coast flying is quite attractive.

Clean balance sheet -Virgin’s lack of balance sheet debt and the expiration of 26 leases between 2019-2022 give Alaska “an immense amount of flexibility in optimizing Virgin’s fleet economics.”

Check out their full article here.

Related:

Virgin America

Comments

  1. I would add that buying Virgin with it’s Airbus fleet takes some pressure off Alaska to keep all Boeing aircraft. Both from it’s maintenance model and I would imagine some peer pressure from Boeing.

    I really like Alaska and Virgin. I think the merger is good but it will still leave Alaska weak in the Midwest and South. At least with Virgin it will give them strength to grow more organically in the rest of the country. I think they need a Midwest hub like MEM, STL, DFW, etc.

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