Alaska Air, Virgin America File Deal Paperwork

Eleven days after Alaska Air Group Inc. announced plans to acquire Virgin America Inc. for $2.6 billion, the two airlines said they submitted paperwork Friday outlining the transaction to the government, as required by the Hart-Scott-Rodino Antitrust Improvement Act.

That law allows the Federal Trade Commission and the U.S. Justice Department to review the proposed transaction ahead of time and determine whether it is anticompetitive. In airline matters, the Justice Department normally takes the lead. The Seattle-based parent of Alaska Air and Virgin America, based in San Francisco, confirmed they filed the documents.

The waiting period normally is 30 days before the parties can close their deals, which in this case is the middle of May. But regulators can ask for additional information in a so-called second request. A second request extends the waiting period by 30 days after the parties have complied by furnishing the additional materials. If the reviewing agency at that point believes the transaction may violate antitrust laws, it can seek an injunction in federal court to prohibit consummation of the deal. And it can drop its suit if the parties agree to make sufficient concessions to preserve a degree of competition.

If Alaska succeeds in making the acquisition, it would become the fifth-largest U.S. airline by traffic, vaulting over JetBlue Airways Corp., which also participated in the bidding for Virgin America. But the enlarged Alaska would be a very small No. 5. The four largest U.S. carriers, all of which bolstered their size through mergers in recent years, control more than 80% of domestic capacity.

Directors of Alaska Air and Virgin America already have approved the combination,which now requires a vote by Virgin America shareholders. The two carriers said they expect to complete the transaction, with regulators' approval, no later than Jan. 1, 2017.

There has been some debate among airline watchers about whether the Justice Department will wave this deal through. The department has approved four larger airline mergers in the past eight years, although it threatened to break up the proposed marriage of American Airlines and US Airways until they agreed to concessions in 2013.

This transaction, although much smaller and with very little route overlap, would be the fifth, and comes as some consumers and members of Congress are still griping about the effects of consolidation on airfares and service levels.

The FTC, which administers the Premerger Notification Program under which the two carriers filed their paperwork, didn't respond to requests for comment. Normally such submissions aren't made public.

Write to Susan Carey at susan.carey@wsj.com

(END) Dow Jones Newswires

April 18, 2016 14:45 ET (18:45 GMT)

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