Alaska Airlines (AS, Seattle Tacoma International) has officially announced it will acquire rival Virgin America (San Francisco) in a cash deal valued at approximately USD2.6 billion. In a joint statement, the carriers said Alaska Airlines had agreed to pay USD57 per Virgin America share and, inclusive of existing Virgin America indebtedness and capitalized aircraft operating leases, the overall transaction is valued at approximately USD4 billion.

"The combination expands Alaska Airlines' existing footprint in California, bolsters its platform for growth and strengthens the company as a competitor to the four largest US airlines," the Washington-based carrier said in a statement. "Combining Alaska Airlines' well-established core markets in the Pacific Northwest and the state of Alaska with Virgin America's strong foundation in California will make Alaska Airlines the go-to airline for the more than 175,000 daily fliers in and out of Golden State airports, including San Francisco and Los Angeles International."

Featuring a single AOC, the merged carrier will operate roughly 280 aircraft on 1,200 daily departures with hubs in Seattle Tacoma International, San Francisco, Los Angeles, Anchorage Ted Stevens, and Portland International. Once completed, Virgin America's Elevate loyalty program will be merged into Alaska Airlines Mileage Plan.

In terms of leadership, the combined organization will be based in Seattle under the mantle of Alaska's President and Chief Executive Officer, Brad Tilden, and his senior leadership team. Tilden and his counterpart at Virgin, David Cush, will co-lead a transition team, which will develop a specific integration plan, until receiving regulatory approval to close.

Though it has been approved unanimously by the boards of directors of both companies, the merger is conditioned on receipt of regulatory clearance, approval by Virgin America shareholders and satisfaction of other customary closing conditions. As such, the sale is expected to close with regulatory approval by January 1, 2017.