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In a $1.4 billion transaction, Southwest Airlines has acquired AirTran to provide further growth to the low-cost carrier. This will be the third acquisition for Southwest, which previously acquired Muse Air and Morris Air and made a failed offer for Frontier just last year.

AirTran provides Southwest with an immediate large presence in Atlanta, entry into Reagan National Airport in Washington DC, and international service to Aruba, Bahamas, Dominican Republic, Jamaica, Puerto Rico and Mexico.

This acquisition appears to be complimentary in terms of routes and structure, as well as fleets, with the exception of the Boeing 717. AirTran will be integrated into Southwest’s operations once the transaction is completed, which will result in changes for AirTran passengers.

AirTran currently offers 2-class seating, with a business and economy configuration and advanced seat selection while Southwest offers one-class seating with board by check-in number open seating. A major change will occur for AirTran passengers.

Acquisition expenses are estimated to be between $400-$500 million, and Southwest believes the acquisition will be significantly accretive after the first year.

This acquisition has significant implications, and the AirInsight team will analyze this transaction as more information becomes available. Stay tuned for a podcast later today.

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