Alaska Air Group-Virgin America: Alaska ups it leverage to expand US market share

For most of its history Alaska Air Group has quietly built up strength in the Pacific Northwest. Beginning in the 2000s, the company undertook a balance sheet restructuring that won Alaska coveted investment-grade status in 2014. That milestone occurred in 2012 after Delta Air Lines began a massive incursion into Alaska's largest hub and headquarters in Seattle.

Alaska arguably held its own under attack from Delta, and has now made a bold move to acquire Virgin America. Alaska's motivation is to build scale and remain relevant in the consolidated US market place. The three large US global network airlines (American, Delta and United) dismiss market share grabs as an outdated concept in the current industry environment, largely due to the fact that those airlines - along with Southwest - control 82% of US domestic seats.

If Alaska is successful in pursuing an acquisition of, and merger with, Virgin America, its scale in the US market, notably on the west coast, improves.