Yesterday, Alaska Airlines announced both the airline’s fourth quarter and 2016 earnings as well as information on their merger with Virgin America. Most of the new information regarding the Alaska Airlines-Virgin America merger is in regards to “investor’s day” which will be held in March. Financial and operational results also proved positive.
Information revealed about the integration of the Alaska Air and Virgin America brands included information on Virgin America’s Airbus a320s, Virgin America’s brand, and the two airline’s frequent flyer programs. Here’s detailed information about the earnings call.
Alaska Airlines has Positive Attitude Toward Airbus
Virgin America is the launch customer for Airbus’ a321NEO, an updated version of Airbus’ popular a321. The a321NEO has added range capable of flying from the East Coast of the US to cities in Western Europe. The a321NEO will be able to hold 185 passengers and would be the largest aircraft in Virgin America’s fleet. Virgin America, prior to their merger with Alaska Airlines, reaffirmed their intention to take delivery of the a321NEO. Following their merger with Alaska Airlines, there was much speculation surrounding what Alaska Air planned to do with the Airbus orders and pre-existing fleet of a320s.
Virgin America Airbus a320
Yesterday, Ben Minicucci, chief executive of Virgin America, stated plans to fly the Airbus aircraft to Hawaii or on transcontinental routes. Brandon Pedersen, the chief financial operator, stated that the airline would take delivery of a handful of the Airbus a321NEOs but would not take delivery of all 10 on order. Alaska Airlines put emphasis on a slow integration of the two airline’s fleets. Alaska Airlines operates a fleet consisting almost entirely of Boeing 737s while Virgin America operates a fleet entirely of Airbus a320s and a319s. Alaska Airlines will continue to fly the Airbus aircraft but on select routes and in lesser quantities.
Fate of Virgin America Brand Will Be Decided in March
The Virgin America brand is very unique. Virgin America came on the scene in 2007 claiming to be “a breath of fresh airline.” The airline has always had a pretty loyal following throughout the west coast. Virgin America referred to passengers as guests, something Alaska Airlines has begun to do. Their crew wore bright red dresses and fashionable sweaters. Mood-lit interiors and posh first class recliner seats were staples of the airlines fleet. They were the first airline to feature wi-fi on every single one of their aircraft.
Regardless of how Alaska Airlines integrates the Virgin America brand into the airline, some loyal Elevate flyers won’t be happy. However, we’re getting closer to finding out the fate of the hipster brand. In March when Alaska Airlines hosts “investor’s day”, the fate of Virgin America will be revealed.
There’re numerous scenarios that could come of investor’s day. Alaska Airlines could decide to keep the Virgin America brand flying operating solely long-haul and premium routes (think LAX-JFK, SFO-FLL). It could also be that Alaska Airlines doesn’t want to touch the Virgin America brand and will just incorporate the corporate side of Virgin America allowing the airline to work complimentary to Alaska Airlines (Yeah, I’m joking, that’s not going to happen). The most likely scenario that will come of investor’s day is the phasing out of the Virgin America brand with Alaska Airlines incorporating some of Virgin’s identity into a post-merge Alaska Airlines. I’d imagine that things like mood-lighting, better first class seats, and updated in-flight offerings would come of the merger. Of course, this is pure speculation but based on previous mergers, the Virgin America brand will likely fade into history.
To go along with this idea of airline integration, Alaska Airlines said that it hopes to have both airlines on a single integrated passenger system in mid to late 2018.
Frequent Flyer Plan Integration Underway
According to Alaska Airlines, ⅓ of Virgin America Elevate members have signed up for Alaska Airlines Mileage Plan. The two airlines are well on their way to integrating their two frequent flyer programs. Alaska Airlines has stressed the importance of Elevate members signing up for a Mileage Plan Account and transferring their miles to Alaska Airlines. This pretty much seals the deal for the Elevate program and hints at some unfortunate news for the Virgin America brand. With Alaska Airlines pushing so hard for Elevate frequent flyers to make their way over to Mileage Plan, it hints at the demise of the Virgin America brand.
Overall
The earning’s call yesterday didn’t reveal tons of new information but it did clear up a few things. We now know that Alaska Airlines is on board with allowing some Airbuses into its fleet of Boeings. We’re also one step closer to knowing what will come of the Virgin America brand. With the demise of Elevate, it’s becoming increasingly evident that Alaska Airlines won’t keep the Virgin America brand around much longer. However, crazier things have happened! Fingers crossed!
What do you think of yesterday’s news? What do you see happening to the Virgin America brand?
