Southwest Airlines closes the chapter on AirTran. What's next for the middle aged LCC?

Southwest Airlines is starting to show some middle aged girth, with its cost base climbing and employee relations not what they used to be. But Southwest began 2015 with a celebration: completing the integration of AirTran Airways after the latter's final service flight in late Dec-2014. The merger integration was a lengthy four year process, reflective of Southwest's historically slow approach to such huge undertakings.

At the time it unveiled its acquisition of AirTran, Southwest outlined three major benefits it would derive from the purchase of its smaller rival - access to Atlanta, an ability to tap small markets and instant access to international markets in Latin America and the Caribbean operated by AirTran.

As the merger unfolded, Southwest's objectives in some of those areas changed, particularly in its small market philosophy and the decisions it made to alter operations in Atlanta. It is tough to determine if Southwest would be worse off if it had not opted to participate in US consolidation; but its financials are no worse for wear after closing the AirTran chapter, with a very decent 19% ROIC for the 12M to Sep-2014.