By Mark Huffman
ConsumerAffairs.Com
September 27, 2010
Southwest Airlines, which grew from upstart regional carrier to
the nation's largest domestic carrier, is getting even bigger. The
company announced today it is purchasing rival discount airline
AirTran for an estimated $1.4 billion.
Southwest said the agreement has been unanimously approved by the boards of directors of each company, and closing is subject to the approval of AirTran stockholders, receipt of certain regulatory clearances, and fulfillment of customary closing conditions.
"Today is an exciting day for our employees, our customers, the communities we serve, and our shareholders," said Gary C. Kelly, Chairman, President, and CEO of Southwest Airlines.
Kelly said the purchase of AirTran will give Southwest entry into key markets it does not serve and positions the carrier for further growth, at a time when its legacy competitors continue to consolidate.
"This acquisition creates more jobs and career opportunities for our combined Employee groups, as a whole. It allows us to better respond to the economic and competitive challenges of our industry, and fits perfectly within our strategy for our fifth decade of service, Kelly said.
Adds Atlanta, Washington National
Southwest sees the addition of AirTran as a way to establish service to and from Atlanta and Washington, D.C.'s Reagan National Airport. The company also said it expects to expand at New York LaGuardia, Boston Logan, and Baltimore/Washington.
Southwest executives say there is minimal overlap in service between the two carriers, but the deal will have to receive approval from U.S. anti-trust officials. It's possible overlapping flights would be consolidated during the merger.
Based on current operations, the combined airlines would have nearly 43,000 employees and serve more than 100 million customers annually from more than 100 different airports in the U.S. and near-international destinations. In addition, the combined carriers' all-Boeing fleet consisting of 685 active aircraft would include 401 Boeing 737-700s, 173 Boeing 737-300s, 25 Boeing 737-500s, and 86 Boeing 717s.
Southwest says the average age of the aircraft is approximately 10 years, making it one of the youngest fleets in the industry. Southwest also announced, previously, that it is evaluating the opportunity to introduce the Boeing 737-800 into its domestic network.
Until closing, Southwest Airlines and AirTran will continue to operate as independent companies. After closing, Southwest plans to integrate AirTran into the Southwest Airlines Brand by transitioning the AirTran fleet to the Southwest Airlines livery.
