Alaska Airlines (AS, Seattle Tacoma International) parent, Alaska Air Group Inc., has announced it has closed its acquisition of Virgin America (San Francisco) paving the way for the merger of the two US West Coast-based carriers.

The definitive merger agreement, which was signed in April, was approved by Virgin America shareholders in July. Its closure, however, has depended on it garnering US Department of Justice (DOJ) antitrust approval, which it did this month, and on the settlement of an outstanding anti-merger lawsuit, settled last week.

Alaska Air Group says it funded the USD2.6 billion merger with cash on hand and approximately USD2 billion of secured debt financing provided by multiple lenders. Approximately USD1.6 billion of the loans were secured by a total of fifty-six of the Group's aircraft, including thirty-seven B737-900(ER)s and nineteen B737-800s. The remainder was secured by the Group's interest in certain aircraft purchase agreements.

As it stands, Alaska Airlines and Virgin America will spend the next year working to secure Federal Aviation Administration (FAA) certification to allow the two airlines to operate as a single carrier. The consolidation is expected in early 2018. Alaska's regional sister carrier, Horizon Air (QX, Seattle Tacoma International), will remain on its own separate AOC.

In terms of network, Alaska Airlines says the two airlines offer an expanded route network with nearly 1,200 daily flights to 118 destinations across the United States, Mexico, Canada, Costa Rica, and Cuba from hubs at Seattle Tacoma International, Portland International, Anchorage Ted Stevens, San Francisco, and Los Angeles International. Virgin America will bring with it growth opportunities in important US East Coast business markets such as Washington National and the three primary New York City-area airports: New York JFK, New York La Guardia, and New York Newark.

In terms of leadership, the combined company will be led by Alaska Air Group CEO Bradley Tilden. Ben Minicucci will serve as chief executive officer of Virgin America in addition to his role as chief operating officer and president of Alaska Airlines.

Peter Hunt, previously Virgin America senior vice president and chief financial officer, will serve as president of the Virgin America subsidiary, reporting to Minicucci. Hunt will be based in the company's Burlingame, California regional headquarters. Both Minicucci and Hunt's positions are effective immediately and remain in effect until the airlines obtain a single operating certificate.

As an early part of the merger, starting December 19, customers will be able to purchase Virgin America tickets at alaskaair.com. Virgin America Elevate members and Alaska Airlines Mileage Plan members will also be able to earn rewards on each other's flights. Then, beginning January 9, 2017, Virgin America Elevate members will be invited by Alaska Airlines to activate new Mileage Plan accounts.