Southwest Airlines to Acquire AirTran; Spreading Low Fares Farther

[Kurt]

Southwest Airlines - Press Releases

Southwest Airlines (NYSE: LUV) announced today that it has entered into a definitive agreement to acquire all of the outstanding common stock of AirTran Holdings, Inc. (NYSE: AAI), the parent company of AirTran Airways (AirTran), for a combination of cash and Southwest Airlines' common stock.



For more information, click here


At Southwest Airlines' closing stock price of $12.28 on September 24, 2010, the transaction values AirTran common stock at $7.69 per share, or approximately $1.4 billion in the aggregate, including AirTran's outstanding convertible notes. This represents a premium of 69 percent over the September 24, 2010 closing price of AirTran stock.



Under the agreement, each share of AirTran common stock will be exchanged for $3.75 in cash and 0.321 shares of Southwest Airlines' common stock, subject to certain adjustments, based on Southwest Airlines' share price prior to closing. Including the existing AirTran net indebtedness and capitalized aircraft operating leases, the transaction value is approximately $3.4 billion.



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.

 

[beachmouse]

When two discount carriers merge, somehow I doubt that the lessening of competition will lead to lower airline fares from the consolidated company.

I wonder how this impacts the St. Joe/new airport partnership. Was Pensacola part of their exclusion zone when they cut that deal? And PNS has had some pretty heavy duty contractual agreements with Air Tran about flight subsidies that can't just be chucked as part of the merger.

I suspect that the lawyers are going to be pretty busy sorting that all out.

 

[scooterbug44]

I have checked fares through ECB since they opened and have yet to find that Southwest or ECB has the lowest fare - even if I am paying for luggage on other airlines it doesn't cancel out that their price is usually 2x as high.

 

[DuneLaker]

I've enjoyed some exceptional airfares on Southwest. Signed up for their emails and have scored roundtrip fare to Orlando for $39 each way, and a $89 one way ticket to Dallas. They seem to have the sales quite often with generous flying dates and schedules. The luggage flying free was a bonus. Today is the deadline for some more specials ranging from $49 for one way to Orlando and I think $109 to Houston. It was cool leaving Orlando at 4:15 p.m. and arriving home to South Walton about 4:15 p.m. - Time Travel. Great direct flight.

 

[Lynnie]

Since Southwest has no gates in Atlanta, this is good news for us here.

 

[sallyh]

Southwest-AirTran airline merger

I am so excited! It looks like Southwest Airlines will be moving into Memphis! Hopefully that will mean lower rates & better schedules - including flights to the new PC airport! Northwest and Delta have had a lock on us, but this is great news.

 

[Kurt]

Southwest deal bodes well for Pensacola | pnj.com | Pensacola News Journal

Southwest on Monday announced a $1.4 billion deal to acquire AirTran, bringing together two of the country's largest low-fare airlines and giving Southwest an entry into the lucrative Atlanta market.

The acquisition would expand Southwest into 37 new cities, including Pensacola.
Only last October, Pensacola lost its decade-long bid to lure Southwest to Pensacola. Instead, Southwest chose Panama City and its new $330 million airport.

Mayor Mike Wiggins said the timing of Southwest's proposed merger could not be better for Pensacola's Gulf Coast Regional Airport, only a few weeks away from completing a $50 million terminal expansion.

"Frankly, I think this could be a real game changer for Pensacola," Wiggins said. "This would be huge for the traveling public, opening up all of Southwest's westerly routes. The market for Southwest is already here, and the terminal expansion is done and ready to go."

 

[sallyh]

I think it's great news! Hopefully it will mean lower fares from Memphis!
As of now, it's cheaper to drive from here to Nashville or Little Rock to fly SW to many destinations.