Thursday, March 31, 2011

AirTran holders OK $1.4 billion sale to Southwest

DALLAS (AP) — AirTran Airways shareholders voted Wednesday to sell the discount airline to bigger rival Southwest for $1.4 billion.

The deal would give Southwest Airlines Co. a foothold in Atlanta — the largest U.S. city it doesn’t already serve — and routes to Mexico and the Caribbean.
AirTran Holdings Inc. said more than 98.6 percent of votes cast and 77.5 percent of all shares were voted for the sale.

Southwest still needs approval from federal antitrust regulators before it can close the deal, which it expects to do in the next three months.

The companies announced the sale last September. Southwest officials have said that rising fuel prices made it even more important to grow and boost revenue at the Dallas-based airline, which already carries more U.S. passengers than anyone.

Southwest earned $459 million on $12.1 billion in revenue last year, while AirTran earned $1.9 million on revenue of $645.5 million.

The two airlines will operate separately until the Federal Aviation Administration allows Southwest to operate them as one, which is expected by early next year.

Southwest has said it will drop AirTran’s fees for checking one or two bags and eliminate the first-class cabin on AirTran planes. The deal could lead to fewer fare sales, as the number of major U.S. airlines continues to shrink.

Southwest CEO Gary C. Kelly said this week that Southwest plans to continue service to all of AirTran’s destinations, some of which are smaller than cities on the Southwest route map. Kelly also said Southwest will keep AirTran’s smaller Boeing 717 aircraft, which would alter Southwest’s all-Boeing 737 fleet.

AirTran directors had unanimously endorsed the sale. Shareholders voted during a special meeting at an airport hotel near the company’s Orlando headquarters.
Shares of Southwest rose 10 cents to close at $12.42, while AirTran shares gained 3 cents to close at $7.35.

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