Monday, September 27, 2010

Southwest Airlines to acquire AirTran

Southwest Airlines announced today it has entered into an agreement to acquire all of the outstanding common stock of AirTran holdings, Inc. – the parent company of AirTran Airways – for cash and Southwest common stock. Here is a fun fact sheet about the two airlines.

I find it interesting that this agreement does not require labor approval. In Southwest's attempt to purchase Frontier, Southwest was all about a pilots’ deal, so the story is much different in this situation. It will be interesting how all of this shakes down.

Southwest is able to build up their New York strength with LaGuardia and begin to get a presence in our nation's capital city and also put pressure on Delta Airlines with AirTran already having a strong presence in Atlanta. Southwest will now be an international airline, servicing Canada, Mexico and the Caribbean.

As we blogged earlier this year, when airlines merge, customers usually come up on the short end. In short, fewer airlines mean less competition and likely higher fares. Fewer airlines mean less availability. That direct flight might now involve a stop (or two) in order to get to your final vacation spot. Less availability could also mean taking flights at times we aren't used to flying – like an early 6:00am flight to catch a connection (often with a long layover) – in order to get to where you are going.

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