Alaska Air has recently announced its plans to acquire Virgin America for $57 per share in cash. The Seattle-based airline will also assume Virgin America’s long-term debt and capitalized aircraft operating leases worth $1.4 billion, making the aggregate transaction value $4 billion. The primary objective of the deal is to expand Alaska Air’s footprint in California and to strengthen its competitiveness against the top four US airlines. The combined entity is expected to generate annual revenue of more than $7 billion. Alaska Air anticipates revenue and cost synergies of roughly $225 million, to be realized at the time of full integration. Also, the airline forecasts one-time merger related costs in the range of $300-$350 million.
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