How Will The Virgin America Deal Impact Alaska Air’s Share Repurchase Program?

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Alaska Air

Much like its peers, Alaska Air had minted a lot of money due to the ongoing commodity slump. The sharp decline in crude oil prices resulted in a notable fall in the airline’s fuel costs, leading to huge cash flows over the last two years. As a result, the Seattle-based airline had repurchased a large amount of its shares to return value to its shareholders. Over the last two years, Alaska Air has repurchased more than 14.5 million shares for total value of $850 million. Further, the airline intended to continue to return value to its shareholders over the short term.

However, Alaska Air’s recent plans of acquiring Virgin America in an all cash deal of $2.6 billion have forced the airline to change its future share repurchase program. In order to fund this deal and the future integration of operations with Virgin America, the airline has decided to slow down its share repurchase program over the next couple of years. Below, we present the airline’s share buyback over the last three years and expected repurchase over the next few years.

ALK-Q&A-merger-15

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Have more questions about Alaska Air (NYSE:ALK)? See the following links:

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Alaska Air Group

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