Discount Carriers Southwest, AirTran Tie Knot --- Merger Deal Valued at $1.4 Billion Would Create Challenger to Bigger Airlines
Discount carrier Southwest Airlines Co. said Monday that it plans to acquire smaller rival AirTran Holdings Inc., in a $1.4 billion cash-and-stock deal that reflects intensifying consolidation in the industry.</br></br>The friendly takeover would give Dallas-based Southwest a major presence at Hartsfield-Jackson Atlanta International Airport, the busiest in the world and AirTran's main hub. It would also extend Southwest's service outside the U.S. for the first time, with the addition of AirTran routes to Mexico and the Caribbean.</br></br>Southwest's expanded footprint could increase pressure on larger network airlines, particularly Delta Air Lines Inc., the dominant carrier in Atlanta. Those carriers are typically saddled with higher costs and charge steeper fares.</br></br>But Southwest also is entering uncharted territory after shying away from acquisitions for most of its history. The airline has produced 37 straight years of profits.</br></br>Airline mergers are picking up as the industry returns to profitability after soaring fuel prices and the recession pummeled demand for air travel.