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Transportation

Alaska Air Upbeat After First Justice Department Meeting About Virgin Takeover

Alaska Airlines executives sounded upbeat after their first meeting with antitrust regulators about Alaska's proposed acquisition of rival Virgin America.

"So far, so good" was Alaska Air General Counsel Kyle Levine's summary of how the initial meeting with the U.S. Department of Justice went.

"I'm not going to presume to say how the DOJ are going to view it or what timing they're going to impose,” Levine said. “I'll tell you we're answering their questions. We're working really hard to show them why we think this is such a good combination for consumers and competition."

The Justice Department has scrutinized recent airline combinations and sometimes required the partners to shed assets to preserve competition. Alaska Airlines believes its proposed takeover of San Francisco-based Virgin America will raise few antitrust red flags, if any.

Levine and the rest of Alaska's management team briefed Wall Street analysts about the merger status during the airline's first quarter earnings conference call Thursday.

Alaska Air Group, the parent company of Alaska Airlines and Horizon Air, reported strong earnings in the latest quarter as it benefited from sharply lower fuel prices. The Seattle-based carrier topped Wall Street's profit estimates, but still its stock closed lower Thursday as the airline sector in general suffered from worries about softer revenue growth in the spring and summer.

Alaska Air announced on April 4 that it won a bidding war for Virgin America with a $2.6 billion all-cash offer. If Virgin America shareholders and federal regulators approve the deal, Alaska would become the fifth-largest U.S. airline.

"Even if the DOJ decides that the deal warrants a closer look, we hope to have clearance well before the end of the year," Alaska Air CEO Brad Tilden said Thursday.

Tilden fielded more questions Thursday about what changes his carrier may make to retain the loyalty of Virgin America's customers when it absorbs the smaller airline into Alaska's operation.

Tilden said Alaska COO Ben Minicucci will lead the integration.

"We're going to be very sensitive to the cultural and the brand issues that we have to bring together," Minicucci elaborated.

"We're going to go into this with a humble approach. We're going to look at both product sets, the tangible product features," Tilden added later. "Look at Virgin's approach, look at Alaska's approach and over 12 or 18 months make a decision of what is best for our collective customers."

Virgin America's fleet of Airbus jets feature mood lighting, seat back entertainment systems and touch screen ordering of food and drink. Alaska's CEO said his team is just starting to consider whether to make retrofits to enhance the passenger experience on its Boeing jet fleet.

"It will be a complex analysis," Tilden said.