OREANDA-NEWS. Alaska Air Group will acquire Virgin America for $2.6bn in a merger that will see the airline expand its presence on the west coast and become the country's fifth largest US airline.

This merger will expand the airlines' presence, both within the US and abroad, the group said. It will open up opportunities for growth on the east coast by increasing its access to Washington, DC and New York City airports. The combined airline will offer more frequent connections to international airports with flights departing from Seattle, San Francisco and Los Angeles.

This acquisition offers Alaska Air Group a key opportunity in California, the company's chairman Brad Tilden said on a call this morning. "While California is our second biggest state in terms of flying, we don't fly east from there really and that affects how much customers living in California can concentrate their travel with us."

The California market is three times the size of the markets of Alaska, Washington and Oregon combined, Tilden said. "This acquisition gives us a solid foothold in California," he said, adding that Alaska Air Group flies to one of the top ten airports out of San Francisco and after this acquisition it will fly to all ten.

The merger complements Alaska Air's geography "really well," and helps it with its goal to be the premier airline for people that live on the west coast, Tilden said.

The combined airline will have 1,200 daily departures, with hubs in Seattle, San Francisco, Los Angeles, Anchorage, Alaska, and Portland, Oregon as well as around 280 aircraft.

Alaska Air Group and Virgin America both benefitted from decreases in fuel costs last year. The combined airline is projected to have annual revenues of more than $7bn, it said.

The companies expect to complete the transaction with regulators' approval by 1 January, 2017.