Alaska Air Group agreed to acquire Virgin America for $2.6 billion, as it announced on Monday. This marks another episode of U.S. airline industry consolidation. The offer is waiting for the regulatory approval.

Alaska Air Group is going to be listed in the top five airlines in U.S. when the takeover pass regulatory approval. The combined company will surpass JetBlue in the fitfth largest U.S. airline behind American, Delta, United and Southwest.

Currently Alaska Air Group accounts for 5% of the U.S. domestic flight capacity, while Virgin America has 1.5%. With the acquisition, the Seattle-based airline will add 60 Airbus A320 jets currently operated by Virgin America, adding to its 147 Boeing 737s fleet.

Alaska will pay $57 per share in cash. The company will also assume existing Virgin America debts and aircraft operating leases of $1.4 billion. That will sum up total aggregate transaction value of approximately $4.0 billion.

Alaska won the purchase bid with JetBlue who withdrew its bid. However, Alaska must pay the premium price for Virgin America above its current market capitalization at 86%. Previously, the $1.5 billion caps of Virgin has already inflated to $1.7 billion following the takeover issue.

Alaska CEO Brad Tilden said in a statement, as cited by The Seattle Times, that the deal brings together "two incredible groups of employees to build on the successes they have achieved as stand-alone companies to make us an even stronger competitor nationally."

Virgin America is a San-Fransisco based airline with its main hub located in Los Angeles and San Fransisco. Acquiring the company will strengthen the positioning of Alaska Airlines in the West Coast.

Billionnaire Richard Branson, who owns 24.9% of Virgin America, expressed his sadness about the company changing hands. Branson said. U.S. Department of Transportation stipulated that he take some of his shares in Virgin America as non-voting stock. Therefore, reducing his influence over any takeover of the company.

Following the acquisition, many Virgin America flyers expect Alaska to maintain the unique presence of the airline. One of them is Maggie Lang, a marketing executive who lives in San Francisco. She admitted to fly Virgin America every six to eight weeks, but she never once flew on Alaska.

"It's really a boutique airline experience," she said in an interview with Wall Street Journal. "The flight attendants are extremely amiable. You get the sense that they really love working for Virgin. The gates don't look like anyone else's gates. The furniture is different."

Reuters reported that shares of Virgin America were up 42.1% to $55.27 in afternoon trading. While Alaska Air was down 5.2%.

Alaska Air on Monday announced that it will acquire Virgin America. The acquisition will be another consolidation in American airline industry. The combined airline will become the fifth largest airline in the U.S. and accounts for 6.5% of domestic flight capacity.