The shareholders of AirTran Holdings, Inc., the parent company of AirTran Airways, have voted overwhelmingly to approve the merger of a wholly-owned subsidiary of Southwest Airlines with and into AirTran.
At a special meeting held on March 23 in Orlando, more than 98.6 per cent of the votes cast and 77.5 per cent of shares outstanding were voted in favor of the transaction, according to AirTran Holdings.
“We are grateful for our stockholders’ strong vote of confidence in this merger,” says Bob Fornaro, AirTran’s chairman, president and chief executive officer. “In approving the transaction, our stockholders recognized the value of bringing together AirTran and Southwest to create a platform for increased profitability and sustainable long-term value.”
“We appreciate the confidence AirTran shareholders have in Southwest to continue the good work of AirTran’s hardworking … employees who have made AirTran a successful airline over the past 17 years,” says Gary Kelly, chairman, CEO, and president of Southwest Airlines. “This approval is another important and exciting step toward completing the transaction and beginning the integration of AirTran into Southwest to ultimately serve the flying public as one carrier.”
AirTran and Southwest announced the proposed merger on September 27, 2010. The deal included a definitive agreement for Southwest Airlines to acquire all of the outstanding common stock of AirTran Holdings, Inc., for a combination of cash and Southwest Airlines’ common stock, in a deal with a face value of about $1.4 billion going by the price of Southwest’s share price at the time.
Overall, the deal would cost Southwest as much as $3.4 billion including AirTran’s indebtedness and capitalized aircraft leases, which Southwest would assume. The merger would see the AirTran Airways operation being merged into Southwest Airlines under the Southwest name, though Southwest plans to keep AirTran’s international routes to the Caribbean and Central America intact – thus giving Southwest an international network for the first time.
Southwest also plans to retain AirTran’s fleet of 86 Boeing 717s should the merger be approved in substantially its planned form. This would give Southwest a two-model fleet (of Boeing 737s and Boeing 717s) for the first time. Southwest Airlines has also agreed a deal wityh Boeing to begin adding Boeing 737-800s to its fleet from 2012, the 737-800 representing the largest version of the 737 ever to be operated by the Dallas-based carrier.
The companies are awaiting clearance on the proposed merger from the United States Department of Justice. The two airlines expect the merger to close during the second quarter of 2011.
Until the acquisition is approved and finalized, both carriers will continue to operate independently. For more information on the proposed merger and incorporation of AirTran into Southwest, visit www.lowfaresfarther.com.