Zach Honig writes that Richard Branson “isn’t happy about” Alaska Airlines buying Virgin America. One Mile at a Time also notes Sir Richard’s sadness.
Virgin America Interior
And of course that’s what Branson is saying publicly. Branson blogged,
I would be lying if I didn’t admit sadness that our wonderful airline is merging with another. Because I’m not American, the US Department of Transportation stipulated I take some of my shares in Virgin America as non-voting shares, reducing my influence over any takeover. So there was sadly nothing I could do to stop it.
It’s true that Branson doesn’t personally have a veto over the deal. He doesn’t say he would have exercised one if he did.
And while there may be some amount of ‘sadness’ Branson is almost certainly very happy with the sale. Of course he has to publicly express sadness, or else he’d be aligning himself with Wu Tang Financial… and that’s not his image.
First, the price paid is almost absurd, a ~ 90% premium over what shares were trading at prior to merger speculation and a 46% premium over Friday’s close. He’s more than doubled the value of his investment from ~ $280 million to $560 million in two weeks. (He’ll almost certainly lose the 0.7% of revenue he takes off the top of Virgin America revenue as a licensing fee, however.)
Second because with Air New Zealand looking to unload its 26% stake in Virgin Australia this helps keep Branson in the running as a potential buyer (his company currently owns a 10% share) or at the very least helps credibly drive up the price if Singapore or Etihad are interested in increasing their stakes.
Virgin Australia Interior
Don’t shed a tear for Richard Branson even as he maintains a posture of ‘sadness’.
As a San Franciscan, I am sad to see our local hero airline who challenged the United megalith and the tepidly-competing Southwest and made a tremendous difference at SFO, fold. On the other hand, Alaska has brought reasonable prices to the Bay Area-Hawaii flights, and coordinates (at least so far) with AA, who I favor but has forsaken SFO/OAK for LAX. Perhaps combining VX with AS will bring a critical mass to their combined operations, and further challenge UA in the west.
It is just too bad that VX’s refreshing shiny equipment and their staff’s great attitude will be diluted by Alaska’s folksy northwest attitude, and run of the mill service. I will appreciate it if the AS Mileage Plan is the successor ff program, but I fear this is not to be, or it will be dumbed down to VX’s poor program.
It truly has been a privilege to fly VX these past few years, and I’ll miss them. OTOH, perhaps AS will stay in the excellent Terminal 2 at SFO and shine with their coordination with AA.
Of course, perhaps US/AA will now consider them a serious competitor rather than a complement, and wreck the Aadvantage/Mileage Plan linkup. I hope not, because AA has steadily abandoned the Bay Area over the last 20 years, and what did they expect would happen? You can’t fly AA North from here. They’ve abandoned Boston, San Diego, LAS and OC from here. OAK was closed as a station. SJC got downgraded. My hope is that AS expanding at SFO might bring back the magic, even if we’ll lose the mood lighting, the live TV video, and VX’s good attitude about customers…. And hopefully we won’t see Hawaii flight prices skyrocket.
Yes, because everything in the world revolves around money….. Maybe the guy is sad to see his airline now become another standard crap US airline. He has enough money as is, I doubt he cares that much if he gets a lot more.
Instead of thinking people only care about money, I’ll believe what Richard Branson said from his own mouth, that he is genuinely sad about this.
@Tom – Ok, Branson is sad, and has plenty of money. Proposed solution: use his money to buy the airline and do whatever he wants with it to make himself happy. Or add some cash to JetBlue’s bid. Or pay Alaska to keep some Virgin touches that he finds appealing.
If he’s ‘sad’ but not sad enough to do anything about it then as Gary suggests it sounds like he’s opting to take the money over avoiding sadness.
You trust his words, but I think the smarter move is to trust his actions.
I’ve been surprised by the online outpouring of people based in primarily SFO but also NYC/LAX, who think that they are genuinely better people because they flew VX, and that now they have to be around lesser people who would actually fly AS.
I’m one of those lesser people . I don’t expect to impress anyone . I have never had a bad experience with Alaska Airlines .
I see nothing wrong with Alaska’s “folksy” attitude although I have referred to it as a good example of Western hospitality. But I can understand CA’s sadness about losing their state’s airline. Sorry guys.