29-Sep-2010 11:35 AM

Southwest's acquisition of AirTran to increase route network by 25%

Southwest Airlines CEO Gary Kelly stated the proposed merger with AirTran will increase Southwest’s route network by 25% and will open up destinations including Atlanta and Reagan National Airport as well as adding 8,000 employees to the carrier’s workforce (Nightly Business Report, 28-Sep-2010). Mr Kelly also stated the carrier is readying itself to launch international services in three to four years. [more - AirTran SEC Filing]

Southwest:It will be a challenge to manage the expansion. In other words, compared to our current route network, this is about a 25% increase in our expansion. It adds about 8,000 employees to our work force and we currently have about 35,000 employees at Southwest Airlines. So we'll need to execute well. We'll need to plan our integration strategy well. And of course we'll be adding a number of new routes. Some of those will be stepping away from a sense from what we've been doing historically. We'll add a lot of small markets. We'll be adding new international markets. But again I think we're very well prepared to take that on. And we believe that we can add that growth profitably.” Gary Kelly, CEO of Southwest Airlines. Source: Nightly Business Report, 28-Sep-2010.

Meanwhile, US Ohio Attorney General Richard Cordray announced plans to conduct a preliminary review of Southwest Airlines proposed acquisition of AirTran (Business Journal of Milwaukee, 28-Sep-2010). The Ohio State Government is also conducting a review into the proposed merger of United Airlines and Continental Airlines.

Ohio State Government:We are going to undertake a careful review of this deal. These are significant carriers that provide important services to Ohio travellers and businesses. We are going to examine whether this deal would make those services more expensive or less available. Access to competitively priced air travel is vital to Ohio’s long-term economic health, and I am committed to fighting for that access whenever I can.” Richard Cordray, Ohio Attorney General. Source: Business Journal of Milwaukee, 28-Sep-2010.

Also, the Law Offices of Howard G Smith, Goldfarb Branham LLP, Robbins Umeda LLP and Brodsky & Smith announced (28-Sep-2010) plans to investigate potential claims against the board of directors of AirTran Holdings, the parent company of AirTran Airways, related to the company’s agreement to be acquired by Southwest Airlines. [more - Howard Smith] [more - Goldfarb] [more - Robbins] [more - Brodsky & Smith]

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