Alaska Air Group Inc has won U.S. antitrust approval for its $2.6 billion acquisition of Virgin America Inc on condition that it scale back its code-sharing with American Airlines Group Inc, the Justice Department said on Tuesday.
Under the settlement, Alaska and American would be banned from code-sharing on routes where Virgin and American now compete, among others, the department said.
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Alaska said in a statement that it was pleased with the approval and plans to close the purchase "in the very near future."
Alaska, which paid a premium of about 86 percent for Virgin, pursued the deal to better compete against Delta Air Lines Inc and American, the company has said.
The merged company would be the fifth largest U.S. carrier after American, Delta, United Airlines Inc and Southwest Airlines Co.
The big four control more than 80 percent of the U.S. travel market, and the Justice Department is hoping that a stronger Alaska Air will compete with the giants.
"Today's settlement ensures that Alaska has the incentive to take the fight to American and use Virgin's assets to grow its network in ways that benefit competition and consumers," Renata Hesse, the acting head of the Justice Department's Antitrust Division, said in a statement.
Alaska in April announced its $2.6 billion cash deal for Virgin America, which will make it the top carrier on the U.S. West Coast. (Reporting by Diane Bartz; Editing by Jonathan Oatis)