Alaska Air: Harvesting the benefits of the Virgin America merger — December 2018

Alaska Air Group has seen its profits dip sharply in the two years since the closing of its $4bn acquisition of Virgin America in December 2016. But with 90% of the integration completed, the Seattle-based carrier is now ready to start harvesting the benefits. At its November 27 investor day, the management outlined plans to return to 13-15% pretax margins in the next couple of years. Is such a goal achievable?

Before the merger Alaska was one of the most financially successful airlines in the US. It was an industry leader on many fronts, be it cost reduction, profit margins, debt reduction, managing to ROIC or returning capital to shareholders.