Virgin America said Monday that it has reached a deal with Alaska Airlines to be acquired for $2.6 billion, creating the fifth-largest airline in the country. However, Virgin Group founder Richard Branson was not striking a celebratory tone.
The English business magnate took to his personal blog to express sorrow and frustration about an increasingly consolidated airline industry.
"I would be lying if I didn’t admit sadness that our wonderful airline is merging with another," Branson wrote. "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."
He added that he started Virgin America in 2007 "out of frustration."
"As more airlines consolidated and grew larger and more focused on the bottom line, flying in the U.S. became an awful experience," Branson wrote. "Despite moves to block our airline from flying, Virgin America began service in August 2007 — with the goal of making flying good again."
Branson suggested the acquisition is a marriage of necessity in a tight market.
"Consolidation is a trend that sadly cannot be stopped. Likely feeling the same competitive pressures as Virgin America, Alaska Airlines approached Virgin America with a proposal to merge," he wrote. "The board of Virgin America has accepted an offer from Alaska, and if the merger is approved by Virgin America shareholders and regulatory authorities, the two airlines will become one."
Virgin America CEO David Crush also expressed reluctance over the acquisition in his statement to customers. He thanked them for their support as the company won travel awards each year since its launch nine years ago.
"Even so, our industry has become increasingly consolidated with each passing year," Crush wrote. "In fact, today just four airlines control more than 80% of the U.S. market. By joining forces with Alaska Airlines – an airline that is also known for its leading operational performance and guest-focus – we are creating the best airline in North America and one with the size and market share necessary to compete in this consolidated environment."
Alaska Airlines delivered its own media statement and rolled out a website enumerating details of the acquisition for customers and investors. The portal includes statistics for projected revenues, departures, passengers, and airplanes.
"Our employees have worked hard to earn the deep loyalty of customers in the Pacific Northwest and Alaska, while the Virgin America team has done the same in California. Together we will continue to deliver what customers tell us they want: low fares, unmatched reliability, and outstanding customer service," said Brad Tilden, chairman and CEO of Alaska Air Group.
Emailed requests for comment to Virgin America and Alaska Airlines went unanswered as of press time.