Alaska Air Group has finally won approval from the Justice Department to buy rival Virgin America.
It gained antitrust approval for the $2.6 billion takeover but with strings attached.
It agreed to a justice department condition to scale back a codesharing agreement with American Airlines Group.
"The modifications will ensure that Alaska will have the incentive to vigorously compete with American as Virgin does today," the DOJ said.
Alaska and American will be banned from codesharing on routes where they compete today or ‘on routes where Alaska would otherwise be likely to launch new service in competition with American following their merger,’ it added.
"The settlement permits Alaska and American to continue codesharing in limited circumstances where it is unlikely to lead to competitive harm and may offer some benefits to consumers."
Alaska Air was not required to offload any landing slots or scale back any reciprocal loyalty agreements.
The deal will now close in the ‘very near future’ Alaska Air said which would make it the nation’s fifth biggest airline behind American, Delta, United Airlines and Southwest Airlines.
"We couldn’t be more excited about receiving DOJ clearance for our merger with Virgin America, With this combination now cleared for take-off, we’re thrilled to bring these two companies together and start delivering our low fares and great service to an even larger group of customers," Alaska Air Group CEO Brad Tilden said.
However the carrier still has to deal with a consumer lawsuit brought by a group of 42 frequent fliers trying to block the merger.
"The company believes the plaintiffs’ claims are without merit and plans to defend its acquisition of Virgin America accordingly," Alaska said.
