Alaska Air Group said today it will acquire Virgin America for $2.6 billion in cash. The deal has an aggregate transaction value of about $4 billion, after debt and capitalized aircraft operating leases.
Alaska Air, currently the sixth-largest US carrier by traffic, will get a larger presence in Los Angeles and San Francisco, airport gates at Dallas Love Field, and more transcontinental service, the company said.
The combined airline network will be of particular relevance to workers in the booming technology markets in Silicon Valley and Seattle, where it will have extensive routes. Out of California airports in particular, it will have more than 175,000 daily fliers, on average.
Both airlines have blazed paths in technological experimentation, something partly possible because of their smaller sizes and younger fleets relative to the US's largest network carriers. (With about 280 aircraft, the two airlines have an average fleet age of 8.5 years -- roughly half of what America's four largest carriers have.)
Alaska was the first American airline to sell tickets via the internet and the first to use satellite-based GPS technology. Last month it became the first US airline to trial electronic bag tags.
Alaska was also early among airlines in replacing its pilots’ paper flight manuals with iPads and in installing biometric-based check-in as an option at its main frequent flier lounges.
For its part, Virgin America led the US airline industry with a redesign of its website that replaced the typical ticket booking interface with one that uses avatars and has a distinctively mobile-first responsive design.
Virgin America has done several experiments with Google, from working on a Chrome app to being the first US airline to make visual tours of its planes available via Google Maps.
The airline also was the first to install a seat-back food and drink ordering system.
Virgin America got off the ground nine years ago with support from minority owner Richard Branson. It went public in 2014, and has generally reported profits since.
The merger deal still needs an okay from Virgin America shareholders and regulators, and won't close until early 2017.
UPDATE 9:36 ET The combined operation will be the second-largest at San Francisco Airport, after United.