![\"Alaska](\"https:\/\/planesintheair.com\/wp-content\/uploads\/2016\/04\/Alaska-Air-buys-Virgin-300x247.jpg\")
<\/p>\nAlaska Air buys Virgin America, but what does it really get for $4 billion? The deal that was\u00a0announced on Monday calls for\u00a0Alaska to\u00a0pay $57 per share in cash. That is a 47 percent premium to Virgin’s closing price last\u00a0Friday. The deal vaults Alaska ahead of rival,\u00a0and losing bidder JetBlue, to become the fifth\u00a0largest airline in the nation. The merger is seen as a way for Alaska Airlines to increase\u00a0its pricing power due to the removal of one of its competitors. Mergers and acquisitions have reduced nine major US airlines down to four, making it easier for the remaining carriers\u00a0to limit flight\u00a0capacity.<\/p>\n
The combined airline will\u00a0control around 5.5 percent of the domestic air travel\u00a0market. This means Alaska will still lag\u00a0way\u00a0behind American, Delta, Southwest, and United. Comparing the 2 air carriers route maps, it looks like Alaska does not really gain any new destinations from this merger. It does give Alaska some slots at\u00a0La Guardia Airport in New York, but\u00a0they already had access to the airport via code sharing flights with American Airlines.\u00a0The biggest question is\u00a0whether Alaska overpaid for the\u00a0small airline with only about two dozen destinations. The reply to that question has been\u00a0that it was a once in a lifetime opportunity to grow overnight in California, while\u00a0strengthening their hold on Oregon and Washington.\u00a0The deal is expected to generate $225 million a year in cost savings. It\u00a0will also expand Alaska Airlines\u00a0presence the East Coast by adding Virgin America\u2019s slots at the\u00a0controlled airports of\u00a0Washington\u00a0Reagan National, and New York City’s\u00a0John F. Kennedy International and LaGuardia.\u00a0The new merged air carrier will be based in Seattle, Washington.<\/p>\n
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