Alaska Airlines has agreed a deal to acquire Virgin America for around £2.8 billion.
The deal will make Alaska Airlines the fifth largest US airline and enables it to expand into hubs such as San Francisco and Los Angeles.
Virgin America CEO Richard Branson could make around £500 million from the sale of the airline, although he admitted there was sadly nothing he could do to stop the deal”.
"I would be lying if I didn't admit sadness that our wonderful airline is merging with another,” he wrote in a company blog.
"Because I'm not American, the US Department of Transportation stipulated I take some of my shares in Virgin America as non-voting shares, reducing my influence over any takeover. So there was sadly nothing I could do to stop it."
It is the first US commercial airline merger since US Airways and American Airlines combined in 2013 to make the world's largest carrier.
Together, the combined airline will have:
- 1,200 daily departures, with hubs in Seattle, San Francisco, Los Angeles, Anchorage, Alaska, and Portland, Oregon
- Approximately 280 aircraft, which include regional planes, with an average age of 8.5 years
- Virgin America's fleet of 60 Airbus A319 and A320 aircraft boast three classes of service, in-flight WiFi and power outlets on every flight, as well as personal, touch-screen seatback entertainment.
If the deal gets approval from US government regulators and Virgin America shareholders, the companies expect to complete the transaction by January 1 2017.
Brad Tilden, chairman and chief executive of Alaska Air Group, said: "With our expanded network and strong presence in California, we'll offer customers more attractive flight options for non-stop travel."