Apr 05, 2016 11:46 AM EDT

Virgin America-Alaska Air Deal – A Huge Win For American Airlines

A report from the Wall Street Journal on Saturday revealed that the Alaska Air Group Inc. could likely end up acquiring Virgin America. If this deal is consummated, American Airlines will end up as the contract's biggest third party beneficiary.  

The relationship between Alaska Airlines and the American Airlines has been extensive and the latter will definitely have an advantage by having a bigger hub in Los Angeles, and the former by opening up a new business center in San Francisco.

With almost zero risk, American Airlines is looking forward to collecting considerable benefits in this arrangement thus it is very intent on the deal's completion.

According to the WSJ, the $2 billion deal offered by Alaska Air to acquire Richard Branson's Virgin America could be enough to beat its rival JetBlue. But an unidentified source said that the deal could still go south.

That source even said that an announcement would be made by Alaska early this week should it succeed in cornering the deal.

Branson's airline company posted good revenues in 2015. The market value of its stocks closed on Friday at around $1.5 billion.

With Alaska Air's investments, it would be able to focus on its expansion beyond its Seattle base where it is now experiencing market pressure from rival Delta Air Lines which wants to consolidate a base in the West Coast.

The partnership between American and Alaska enables the two carriers to transfer passengers with each other. That relationship also enables members of both carriers to have the equal status between the two airline companies.

With this relationship, access is given to American Airlines into Alaska Airlines networks and vice versa. The relationship is effectively like that of a single airline company.

This is where American Airlines will benefit the most since its network is weaker in the West Coast of the United States, Canada and in Alaska.

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