Southwest closes $1B purchase of AirTran

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By David Koenig
Associated Press Writer

DALLAS (AP)—Southwest Airlines Co. closed its $1 billion purchase of AirTran on Monday, securing its spot as one of the biggest U.S. airlines and extending its reach beyond U.S. borders.

For Southwest and AirTran customers, nothing much changes right away. There will be separate websites, frequent-flier programs and bag-fee policies. AirTran charges for checked baggage, while Southwest allows two bags for free.

Bob Jordan, the Southwest executive who will run AirTran, said Southwest probably won’t do away with bag fees or AirTran’s first-class cabins or even repaint the planes in Southwest colors until at least next year. Southwest expects to get a single operating certificate from the Federal Aviation Administration in the first quarter of 2012.

By buying AirTran Holdings Inc., Southwest gains its first presence in Atlanta and at Reagan National Airport in Washington, plus additional gates at New York’s LaGuardia Airport.

AirTran employees attending an event at Southwest’s Dallas headquarters said they believe their jobs are safe because Southwest and AirTran overlap on only a few routes, reducing the likelihood of layoffs.

Southwest has said it will end AirTran flights at Dallas-Fort Worth International because Southwest operates many more flights at nearby Dallas Love Field. Southwest CEO Gary Kelly said his airline will study AirTran’s other locations but hasn’t yet identified any for closure.

Southwest pilots hope AirTran’s strength in the Southeast and flights to Mexico and the Caribbean will allow the company to grow, providing job security.

“Southwest is about as stable as it gets in the airline business, but adding Atlanta completes our U.S. market and makes us that much more stable,” said Brad Monda, a Southwest pilot.

The deal increases Southwest’s size overnight by about a quarter, as measured by passenger traffic.

Southwest valued says the deal that closed on Monday values AirTran at $1 billion. It used cash to pay for the transaction. Southwest expects to spend about $500 million on the integration. It expects to save more than $400 million by 2013 by eliminating overlapping functions.

Southwest shares fell 3 cents to close at $11.72.

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