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Virgin America May Be Close to a Merger Deal

SmarterTravel

Last week, amid unconfirmed rumors that Virgin America was in merger talks with unnamed potential acquirers, I suggested that the best fit would be a combination with JetBlue. According to a new Bloomberg report, I was half right: One of the would-be buyers is indeed JetBlue; the other is Alaska Airlines.

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The report cites as its source “people familiar with the matter,” but so far there’s no official confirmation from any of the three airlines. And a merger with either JetBlue or Alaska is anything but a forgone conclusion. Another U.S. carrier might make a bid. Delta, for one, has been mentioned as a possible candidate. Or a foreign carrier, together with a U.S. partner, might be interested. Or, of course, Virgin America’s stockholders could decide the best offers fell short of expectations, and take the company out of play altogether.

Still, the anonymous source for the story suggested that “a deal could be announced as early as next week.”

My view remains that JetBlue would be by far the most suitable merger partner. Virgin America and JetBlue have compatible fleets, complementary route networks, and similar business models. Plus, their corporate cultures are more alike than they are different. San Francisco-based Virgin America, with its hip city vibe, folded into Alaska, which used to place Christian prayer cards on its tray tables? Oil and water.

In response to the reports, Virgin America share prices were up 10.33 percent for the day, signaling that Wall Street takes the rumor seriously and is betting on a transaction that will materially affect the company’s market value and stock price.

Stay tuned.

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After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

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