Alaska Air Group had announced it was acquiring Virgin America for over $2 billion, combining their presence on the West Coast and reigniting the debate over the consolidation of the airline industry.
Alaska Airlines was paying cash of $57 per share for Virgin America, which was a premium of 47% over the Friday closing price of the airline. Shares of Virgin were up over 39% in Monday trading before the opening bell.
The two companies put this transaction value at $4 billion, which included debt as well as capitalized aircraft leases.
Virgin America started with the support of Richard Branson a minority owner and began flying during 2007. It went public during November of 2014 with a $23 a share initial public offering.
Virgin, which in 2013 turned profitable, earned over $340.5 million in 2015, which was a company record. The profits for the airline came from a slowing down of rapid growth and from help from low prices of fuel.
Virgin would have been forced to restart growth this year as it already has taken delivery of new aircraft. New routes often begin with losses.
Alaska Air announced that this deal would expanded its route network to 1,200 departures daily. The airline back than was the sixth-largest U.S.-based carrier by traffic and was serving 90 destinations in the United States, Canada as well as Mexico.
The deal would give Alaska Air a larger presence in Los Angeles and San Francisco along with a number of transcontinental routes.
This transaction would also give Alaska Air much more access to airports in the East Coast like JFK International and LaGuardia in New York and Ronald Reagan in Washington.
The newly combined business, which is based in Seattle, Washington, have over 280 aircraft. Alaska Air has been a loyal customer of Boeing for a number of years, flying nearly an entire fleet of 737s. Virgin however only had jets made by Airbus.