That’s nearly double what Virgin America’s market cap was before negotiations started.
Alaska currently has no Airbus aircraft and they’re buying an airline with an all-Airbus fleet. Though most of that fleet is leased, not owned.
Virgin America’s hubs are in Los Angeles and San Francisco, airports that are not slot restricted. Alaska could have grown organically there by just buying more Boeing planes and it would have cost a whole lot less than buying an airline.
They do gain a small presence at slot controlled Dallas/DAL, JFK, LaGuardia, and Washington/DCA.
It’s highly unlikely that Alaska will keep Virgin’s flashy first class or hip vibe. They may even look to sell off Virgin’s leases and the planes that they own.
Virgin America’s mileage program will be rolled into Alaska’s much stronger mileage program.
So what did Alaska gain?
They stopped JetBlue from buying Virgin America (which would have been a far more logical fit) which makes them the number 5 carrier in the US. For now.
They gain some bulk to compete with Delta, which has been encroaching on Alaska’s Seattle hub.
But overall, it’s hard to see what the driving force is to make them overpay so wildly for Virgin America.
Alaska currently has lots of airline partners in OneWorld, Skyteam, and non-aligned partners. It will also be interesting to see if they can hang onto them even as they grow through the merger. I’d wager that they won’t.