Southwest Airlines has announced its acquisition of AirTran Holdings for USD$1.4 billion in a cash and stock merger of two of the biggest discount carriers in the US.
Southwest is to buy AirTran for USD$7.69 per share, a premium of 69 per cent to AirTran’s Friday closing price, Airwise.com reported.
The deal is comprised of a USD$3.75 per share cash component and 0.321 Southwest shares for each existing AirTran share.
Southwest said the transaction value is about USD$3.4 billion, after taking account of AirTran’s existing debt and capitalised aircraft operating leases.
"The acquisition of AirTran represents a unique opportunity to grow Southwest Airline’s in key markets we don’t yet serve and takes a step towards positioning us for future growth," Southwest’s chief executive, Gary Kelly, said.
These key markets include Atlanta – AirTran’s hub and the busiest airport in the US – Washington DC, New York and Boston.
Southwest said the deal would create "hundreds of additional low-fare itineraries for the travelling public" and would help drive down prices in the industry through tougher competition thanks to its greater scale.
Source = e-Travel Blackboard: C.C