Shares of Virgin America (VA) soared this morning in the wake of a merger deal with Alaska Air (ALK), but Virgin Group founder Richard Branson remarked that he views further industry consolidation and the swallowing-up of his customer-centric airline with “sadness.”
MERGER: This morning, Alaska Air reached a deal to acquire Virgin America for $57.00 per share, significantly boosting its presence on the West Coast. During a subsequent conference call, Alaska executives noted there is a chance the company will use the Virgin America brand again in the future.
BRANSON NOT CELEBRATING: Weighing in on the news, Virgin Group founder Richard Branson remarked in a blog post that Virgin America was launched out of “frustration” with the industry's obsession with the bottom line: “Virgin America has brought new competition, lower fares and a focus on creating an enjoyable in-flight experience to the u.s., [forcing] the big legacy airlines to step up and find ways to compete — including by updating their fleets after years of ignoring customers.” Though Branson conceded that consolidation “is a trend that sadly cannot be stopped,” he noted that “I would be lying if I didn't admit sadness that our wonderful airline is merging with another. Because I'm not American, the U.S. Department of Transportation stipulated I take some of my shares in Virgin America as non-voting shares, reducing my influence over any takeover. So there was sadly nothing I could do to stop it… The important thing now is to ensure that once Alaska witnesses first-hand the power of the brand and the love of Virgin America customers for our product and guest experience, they too will be converts.”
PRICE ACTION: Virgin America shares have jumped 42.1% to $55.28 following the merger announcement, while Alaska Air is down 4.91%. JetBlue (JBLU), which was named by media outlets as the leading competitor to potentially beat Alaska's offer for Virgin, is down 3.6% to $20.57.
