Virgin America in talks to sell itself to JetBlue, Alaska Airlines

Virgin America (VA) airlines could soon be going the way of People Express and TWA. The low-cost airline has put itself up for sale and may soon be taken over by JetBlue Airways (JBLU) or Alaska Airlines (ALK), according to reports.

Offers from the two companies are due by the end of the week and a preferred buyer could emerge as early as this week, though a final deal would take longer to complete, The Wall Street Journal reported, citing unnamed sources.

Virgin America, the brainchild of British billionaire Richard Branson, has been operating since 2007, but has only begun making money in the last two years. Based in Burlingame, California, near San Francisco International Airport, the budget airline has focused on flying between the East and West coasts, and recently expanded into Denver and Dallas, and begun flights to Hawaii.

Acquiring Virgin America would give JetBlue a larger presence on the West Coast, including Los Angeles and San Francisco, and complement JetBlue's hub at New York's John F. Kennedy International Airport and its network along the East Coast, according to Bloomberg, which first reported news of a possible merger deal Monday. The purchase would also eliminate a competitor on lucrative cross-country routes.

Should Alaska Airlines emerge as the preferred suitor, the purchase would eliminate a competitor on the West Coast and expand Alaska's route network in Mexico.

Helane Becker, an analyst at Cowen & Co., told Bloomberg that a buyout offer from "JetBlue would make the most sense from an aircraft, network and product offering perspective." One example is that both airlines fly Airbus aircraft, which means JetBlue wouldn't need to train pilots or maintenance crews on how to operate Virgin's planes. Alaska, meanwhile, flies mainly Boeing (BA) planes.

Last month, Virgin America reported adjusted earnings of $201.5 million in 2015, the most in its brief history. It is 54 percent owned by Branson's fund, VX Holdings, and Cyrus Capital, Becker said in a report, noting that the large shareholders may be seeking to "monetize their investment."

In the past year Virgin America has faced steep declines in unit revenue, or sales relative to flight capacity, after bigger rivals added seats to gain share and took advantage of lower fuel costs that made it cheaper to operate flights, Reuters reported.

Bloomberg also reported that an undisclosed Asian airline may also be interested in purchasing Virgin America, though although it would have to partner with a U.S. bidder under foreign ownership rules governing U.S. airlines.

Virgin America is the nation's ninth largest airline. Its purchase would be the latest in a string of mergers within the airline industry that has resulted in four top carriers: American Airlines (AAL), Delta Air Lines (DAL), United Continental Holdings (UAL) and Southwest Airlines (LUV).

A bid to purchase Virgin America from either JetBlue or Alaska Airlines would like pass review by the Department of Justice's antitrust division, Reuters reported.

Shares of all three airlines rose Monday, as news of a possible merger broke. Virgin America rose more than 10 percent, while JetBlue and Alaska Airlines rose more modestly. On Tuesday, Virgin America gained another 1.5 percent in mid-morning trading.