Well said...I would add grossly overpaid too but that was because of B6.

If B6/VX happened then Alaska would have been pigeonholed in SEA/PDX with DL growing larger and nowhere to reasonably expand with a new west coast competitor likely to enter/grow many short haul west coast markets further fragmenting the market.

AS buying VX blocked B6, who has completely failed to form a west coast short haul strategy since then (LGB is a disaster, and likely to disappear completely). B6 has grown their transcon market share, which has been lucrative and something AS hasn't really seemed to focus on.

In hindsight, I think AS bought VX out of fear of the possible outcome vs the probable outcome. B6 wanted out from LGB, and if they merged with VX then I think the transcon flying would have expanded more than we have seen already along with Hawaii flying and leisure Mexico type destinations from LAX/SFO leaving LGB as a ghost town. Short haul west coast was never going to be a big segment for the combined carrier, but AS was worried mostly about that.

When we get through collapsing in on ourselves and likely returning to a single fleet it will be curious to see if anything from the merger is left. Happy to be much closer to the end. Feel bad for the bulk that are just stuck in the middle wondering what if anything comes next....

it saved them four billion dollars and a lot of problems.

B6 had a lot to gain from winning the auction, way more than AS did. B6 lost the auction but made AS pay far more for VX than it was worth. Big winner was VX stock holders that got a nice unexpected return from that dumpster fire.

Whats happening now will mitigate some of the sour grapes B6 felt and also amplify the cost vs value paid by AS. B6 will gain the extra gates at LAX and SFO it was after in the VX bidding due to covid while at the same time AS is pulling back from those airports. So in the end AS paid way too much just to delay B6 expansion into SFO/LAX for 5 years.

B6 has also run AS off the vast majority of the transcon game before all this, just like it was in the process of running VX out before they went under. That battle is over, especially now that it looks like even more gates and growth can happen for B6 at sfo/lax.

AS fears of B6 competition in the west was a phantom when the real threat was WN in California which was totally un phased by AS getting VX. AS is back to square one being a big fish in SEA and PDX and no more tricks left up its sleeve to keep B6 out of LAX/SFO nor out compete them on transcons with their old fashion 737 1st class vs MINT.

As far as Hawaii, that fruit is being picked off of AS's vine by WN and I'd imagine sometime in the future by a MINT expansion there too.

As long as we're playing "what if" why don't we consider what if Alaska had grown organically instead of buying VX? The cost to start Virgin America and grow it to 60 aircraft was about $900 million dollars. Alaska could've done the same thing starting in 2007: ordered an additional 60 737s and used them for California expansion. This expansion would've been cheaper and easier for Alaska than it was to launch and grow VX because Alaska was already an established airline with a network, loyalty program, credit card, ttraining department, maintenance etc. I'm guessing that Alaska could've grown itself in California to the size of VX for $600 million vs Virgin America's $900 million.

Alaska's risk aversion meant that Alaska paid $4 billion for what it could've done by itself for $600 to $900 million. That $4 billion was money earned by the Alaska employees and it went straight into the pockets of the billionaire hedge fund owners of Virgin America (Cyrus Capital still owned over 50% of VX's stock at the time of the merger, Branson 25%, various characters from American airlines history held around 10%.)

I think Brad and Ben are smart guys and they learned from this mistake. I'm hopeful that they'll be more aggressive in the future.

......so you’re saying an Alaska/JetBlue merger is imminent, huh?

Not to beat the dead horse...

I may be wrong in the history, apologies in advance it I am...

The actual cash outlay for VX stock was something like $2.6bn. The other $1.4bn of "debt" (the total of $4.0bn) was calculated off the aircraft lease payments, those payments were covered as VX was cash flow positive/profitable at the time of purchase. In addition, AS gained $600m in cash that VX had on hand.

S

It's logical, from a business perspective.

After you filter out the management personalities and parochial emotional investment.

Both could stand to be larger in the era of mega-legacies and the 8,000# LCC.

Sheeeh that’s gonna be a lot of Airbuses to park.