Southwest to buy AirTran, create US budget airline juggernaut

Sep 27, 2010, 19:51 GMT

New York - Leading budget carrier Southwest Airlines Co will expand its reach across the United States with the purchase of fellow discount airline AirTran, the two firms announced Monday.

The purchase of AirTran Holdings Inc for 1.4 billion dollars in cash and stock values the company at 7.69 dollars per share, more than two-thirds higher than last Friday's closing price.

The deal dramatically extends Southwest's access to markets in the south-eastern United States and deepens its penetration in the north- east.

Based in Orlando, Florida, AirTran has a hub at Hartsfield-Jackson Atlanta International Airport, the world's busiest airport, which was previously unserviced by Southwest.

From Atlanta, Southwest will have flights to Mexico and the Caribbean. The AirTran tie-up also gives Dallas-based Southwest more flight slots in New York and Boston.

Southwest chief executive Gary Kelly called the takeover a 'significant step toward positioning us for future growth.'

Southwest will now clash head-on with Delta Air Lines, which has its primary hub in Atlanta.

The purchase enlarges Southwest as UAL Corp, the parent company of United Airlines, becomes the world's largest carrier as it completes a merger with Continental Airlines Inc.

The enlarged Southwest will employ 43,000 people, and its exclusive fleet of Boeing 737s will now include Boeing 717s for a total of 685 aircraft.

The combined airline will have flights to more than 100 airports in the United States, Mexico and the Caribbean.