Virgin America Inc. has received takeover bids JetBlue Airways Corp. and Alaska Air Group Inc as low US cost airline backed by British billionaire Sir Richard Branson explores a sale, a person familiar with the matter said.
Asian airlines have also expressed interest in buying Virgin America, although they would have to partner with a bid of US under the rules governing foreign ownership US airlines. The source asked not to be identified because the sales process was confidential. California-based JetBlue, Alaska Air and Burlingame, Virgin America declined to comment.
In the past year, Virgin America has faced sharp declines in unit sales or revenue in relation to the flight capacity as larger rivals have added seats to gain market share and take advantage of lower fuel costs that make it cheaper for operate flights. A merger with another airline Virgin America flights could give more help to compete.
Analysts said the deal would make sense particularly for New York-based JetBlue, which has room to grow on the west coast of the United States. Both carriers flying the same type of aircraft, which means that JetBlue would not have to train pilots and maintenance personnel on how to operate the aircraft Virgin America.
Buyers benefit from corporate accounts Virgin America with leading technology companies like Facebook Inc. and alphabet Inc, an analyst at Sterne Agee CRT Adam Hackel he said.
A buyer would have to assume the rental fleet of Virgin America, probably above market rates, however, and might have to walk its pilots lower than average wages, said JPMorgan analyst Jamie Baker in a note investigation last week after news of a possible sale broke.
Virgin America is 54 percent owned by funds Branson, VX Holdings, and Cyrus Capital Partners. Large shareholders may be looking to monetize your investment with a sale to another investor or a partial sale of a foreign airline / company would have a codeshare agreement attached to it.
Virgin America, based in Burlingame, California, sold shares in an initial public offering of $ 353 million within 18 months, the prices of its shares at $ 23 each.
Mega-mergers among larger US airlines in the past decade have reduced the industry to four players - American, Delta, United and Southwest, which control more than 80% market share.