JetBlue said to want Virgin America deal
Jet Blue Airways, the busiest carrier at Fort Lauderdale-Hollywood International Airport, is reportedly involved in a bid to buy Virgin America.
Shares of Virgin America Inc. are taking off amid speculation that the carrier backed by celebrity entrepreneur Richard Branson has received takeover bids from JetBlue and Alaska Air Group Inc.
Shares of the Burlingame, Calif., airline surged 10 percent Monday when talk about a potential merger surfaced, jumping $3.53 to close at $37.70. Shares rose an additional 29 cents, or less than 1 percent, Tuesday to $37.99.
If the acquisition occurs, it would be the latest in a series of mergers by the nation’s largest carriers that culminated last year with the union of American Airlines and US Airways to form theworld’s largest airline. More than 70 percent of the nation’s domestic air traffic is now controlled by four carriers: American, United, Delta and Southwest Airlines.
Although the U.S. Department of Justicewas initially critical of the American Airlines-US Airways merger, the takeover of Virgin America by another small carrier such as Jet- Blue or Alaska would probably pass an antitrust review, Helane Becker, an analyst for Cowen & Co., said in a note to clients.
“In our view, another larger [low cost carrier], along with Southwest, would keep the domestic market competitive, and give travelers a competitive fifth choice,” she said.
A merger between Virgin America and JetBlue would make the most sense because it would strengthen New York-based JetBlue’s offerings on the West Coast, according to industry experts. Also, both JetBlue and Virgin America fly Airbus jets, eliminating the need for JetBlue to retrain pilots or mechanics to operate on jets from a different manufacturer.
Virgin America flies a fleet of 60 Airbus jets. JetBlue has a fleet of 217 planes, primarily Airbus jets, along with about 60 Embraer 190s planes.
JetBlue would also pick up Virgin America’s routes to Hawaii, which launched last year.
JetBlue handled 23 percent of the passenger traffic at Fort Lauderdale-Hollywood in January, according to the latest airport data. Its total of 590,355 passengers was up 21 percent from last year.
Virgin held 1.5 percent of the market with 37,496 passengers, an 8 percent drop from January 2015.
Virgin America, Alaska and JetBlue declined to comment about the speculation, which was reported Monday by Bloomberg News and Reuters.