Southwest Airlines will buy low-cost competitor AirTran Airways in a $1.4 billion cash-and-stock deal that puts Southwest into Atlanta’s giant Hartsfield airport, expands its markets in the Southeast and along the Eastern seaboard, and moves the famous “Love” carrier closer to going international. If debt and aircraft operating leases are included, the deal is worth $3.4 billion
Southwest will combine the two airlines into one that will carry Southwest’s name and colors and continue to be based at Love Field in Dallas, Southwest’s chief executive, Gary Kelly, said.
Shares of Southwest jumped 11 percent, up about $1.36, trading around $13.64 at 11:30 a.m. CDT. AirTran Holdings stock soared 61 percent, up $2.80, trading around $7.35.
Asked by a securities analyst during a morning conference call whether Southwest will adopt AirTran amenities such as first class, Kelly responded:
"We are not contemplating that we'’ll have two separate airline brands. We’ll have one Southwest Airlines that we are fully integrating. Then we’ll have to affirm either the current customer policies we have in place today or modify. We are not assuming we will be open to assigning seats, charging for bags, having dual-class service, anything along those lines.”
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