What To Expect For Alaska Air? A Look At Past Airline Mergers

With Virgin America

announcing a deal with Alaska Air Group

, we wanted to take a look back and see the past impact on airline consolidation. That in mind, let's evaluate these previous 3 deals and their sequential moves to anchor a reference point to AlaskaAir. In 2008, Delta Air Lines

announced a merger with Northwest Airlines that comprised of an all-stock deal. Northwest shareholders would receive 1.25 shares in the new ‘Delta' entity, which implied a 17% premium for Northwest shares. After the deal completed, shares traded steadily over the next 4 years, touching a low of $4.06 and reaching a high of $14.58 before the stock took off in 2013. From 2013 to now, the stock ascended from around $13 to its $48.17/Share price. While this deal left the company's stock middling over the next few years, it's important to note the timing of the deal with the U.S. recession. The major acquisition in the space continued in 2010, where United Airlines and Continental Airlines agreed to $3.17 billion merger with focus on leading in the domestic markets. Again, the deal was an all-stock deal that saw each Continental share receive 1.05 shares in the parent UAL Corporation. Again, the deal United Continental Holdings Inc

share price remain somewhat stagnant over the next 2 years, as the stock price fluctuated between $16.50 to $29.00 levels, before the 2013 surge that Delta saw. From 2013 to now, shares pushed higher from around $25 to the $57.49 price we see today. This again shows that 2013 was the start for a precipitous climb for each of these merged companies. Finally, let's take a look at the $1.4 billion deal of Southwest Airlines Co.

for AirTran Airways. The deal allowed Southwest to take advantage of AirTran's concentration of flights in Atlanta for domestic travel. Following the deal, shares traded as low as $7.15 to $11.05 at the beginning of Jan. 2013. Like the other deals noted above, shares then took off in 2013, rising to a high of $51.34 in late 2015 before settling at $44.64 trading price today. What does this mean for Alaska Air and Virgin America? These deals are all among similar sizes, but each merger took time to integrate each company's operations before really seeing share price take off. Given the timing of these deals with the market recession in the past, it's important to note how these mergers synergies took time to take affect, but not quickly anchor similar expectations for Alaska Air and Virgin America.