Virgin America Inc. (NASDAQ:VA) closed Tuesday, up 0.77% at $37.99 with some of the airlines showing interest in acquiring it. There are speculations that JetBlue Airways Corporation (NASDAQ:JBLU) and Delta Air lines, Inc. (NYSE:DAL) are airlines that are close to expressing interest in purchasing the budget carrier.
JetBlue seems close to a possible acquirer given that both their target markets are of similar nature. Both of them focus on attracting customers that are able to pay a meager premium for better service. JetBlue also focuses on high geography as its unique selling point when it comes to attracting customers.
Moreover, JetBlue’s A320 family planes will perfectly integrate with the Virgin America’s fleet. This will help both the companies to pose better ideas due to similarities between each other.
JetBlue has a robust regional network and is pretty strong in the East coast. It is also flying on some of the very important routes including New York and Boston. This will help in the growth opportunities.
Benefits to JetBlue of a Possible Merger
JetBlue will win higher margins in West coast where it is comparatively weaker than in the East coast, this merger will be the key turning point to make that happen. Virgin America has a good asset base in Los Angeles and San Francisco, which will help JetBlue improve the margins if a merger takes place.
Merger will also help JetBlue further expand its customer base. This will be further aided by combined lower cost which will help attract customers. As a result, this merger will lead to some of the best growth opportunities for both the concerned parties and stakeholders at play.