Last updated: 02:56 PM ET, Wed March 30 2016

Virgin America Sale Could Be Announced by Next Week

Airlines & Airports | Josh Lew | March 29, 2016

Virgin America Sale Could Be Announced by Next Week

Photo courtesy of Virgin America

There have been rumors swirling about which airlines are interested in buying Virgin America, which owner Richard Branson recently put up for sale. A new report says that there are now at least two bidders from the United States, and a deal could be announced in the near future.

As early as next week, Virgin could announce that it has been purchased by either JetBlue or Alaska Airlines.  The report does not mention anything about a different rumor, that Virgin had received an offer from Chinese carrier Hainan Airlines.

Even if they do not purchase the majority share that Branson is now reportedly offering, foreign airlines could seek to purchase publicly-held shares from current investors and gain a major minority stake in Virgin that way.

Wall Street likes the merger idea

Overall, investors have been excited by the news of Virgin’s not-so-secret secret sale. Since the initial Bloomberg report revealing the rumored sale last week, Virgin America’s shares have gone up as much as 15 percent. After the latest rumors, shares of both Alaska Airlines and JetBlue also rose slightly. This shows that Wall Street favors a Virgin merger.

READ MORE: Alaska, JetBlue Seek to Buy Virgin America: Which is The Best Fit?

No official word yet

Despite the buzz, neither Alaska Airlines or JetBlue are willing to comment on the rumors. Virgin America is remaining quiet as well. Whoever is leaking the information is doing so on condition of anonymity. JetBlue has been the one airline that has consistently been mentioned in the rumored sale.

A new player in the merger

Alaska Air has only been mentioned recently. JetBlue, which operates most of its routes on the East Coast, would have less overlap with Virgin America’s current routes. This means that the two airlines could compliment each other without having to alter their route maps significantly. Alaska, on the other hand, would be able to eliminate one of its main competitors should it be the one who offers the winning bid to Virgin.

Both Virgin and Alaska are focused on the West Coast and Hawaii. Also, Alaska could benefit from access to Virgin’s hub in San Francisco. This would give it a dominant presence in both Seattle and the Bay Area. So even though JetBlue seems like the more likely partner in a merger, Alaska also has viable reasons for making an offer. 

READ MORE: Virgin America Starts Fare War With Hawaii Flights

Stockholders could play a role

Branson and his private investors still own more than half of Virgin America, but 46 percent is now held by stockholders. Investors with a large number of shares could have a say in what the final sale looks like. Some could offer their shares to foreign airlines in exchange for some sort of alliance or code-sharing agreement.

Or all these rumors could come to nothing and Virgin America could decide that it wants to remain independent for the time being.

It looks like we could know something by next week. 

RELATED: TravelPulse Founder Mark Murphy appeared on CBS News to share his thoughts on a pending merger.


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