Posted September 29, 2010 10:10 AM
By Ben Colclough
Thoughts on the Southwest and AirTran Merger
Ryanne Woltz, Relationship Manager in Ascend USA, provides an update on the Southwest and AirTran merger...
On September 27th it was announced that Orlando, Florida based AirTran Airways has agreed to be bought by Dallas based Southwest Airlines in a $1.4 billion deal which will result in AirTran shareholders receiving a combination of cash and Southwest stock in exchange for their shares.
The estimated payout will be between $7.25 and $7.75 a share. The merger first needs to be approved by AirTran stockholders as well as federal regulators, which may take months to occur. If the merger closes, it could then take a few years to integrate the two airlines and begin operating as one carrier, which the airlines expect to happen in 2012. Until the deal is completed it’s business as usual for AirTran, but after the merger the airline will operate as Southwest, using their colors and logos.
Currently Southwest has 349 aircraft, all Boeing 737s, in service. The merger would change their operating strategy slightly by adding 138 aircraft including 717s into the current fleet mix. It would allow Southwest’s route network to grow 25 percent, gaining a major presence in Atlanta, expansion in New York, Boston, Baltimore and Washington, as well as access to Mexico and the Caribbean for the first time.
The merger is a sign that there is corporate confidence and that the economy could be on a rebound, but what does it mean for the customers? Only time will tell the impact on competition, discounted fare offerings and benefits from expanded route offerings, but Southwest does intend to keep the no-fee bag policy.
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