Southwest Airlines to buy AirTran for $1.4 billion

Money Morning submits: By Don Miller In a deal that turns up the heat on its bigger rivals, Southwest Airlines Co. (NYSE: LUV) on Monday announced plans to buy discount carrier AirTran Holdings Inc. (NYSE: AAI) for $1.4 billion.

The acquisition, which still needs regulator approval, would give Southwest a stronger presence in the Northeast and enable it to offer service to Atlanta, as well as Mexico and the Caribbean.Southwest Airlines announced Monday it will purchase AirTran Holdings in a $1.42-billion deal that will expand the nation's largest low-cost airline to 37 new cities, including Atlanta — home of the nation's busiest airport.

Low-cost carrier Southwest Airlines is buying AirTran Airways for $3.4bn (£2bn) in another sign of consolidation in the US market

In the latest move in airline consolidation Southwest Airlines is buying Airtran Airways. The deal is worth about 1.4 billion dollars, more if you throw in Airtran debts.» E-Mail This     » Add to Del.icio.us

YCHARTS.com submits: Most of us sane adults have gotten the idea of investing in airline stocks out of our systems. It’s an industry that provides a fabulous service to its customers, but one that destroys gobs of capital and in some years has seemed to pay out most of its cash to bankruptcy lawyers.

AirTran Holdings Inc. (AAI) soared 64 percent to $7.31 for the biggest advance in the R2K Index. Southwest Airlines (LUV), the nation’s largest discount carrier, announced on Monday that it had agreed to buy its smaller rival in a transaction valued at $1.4 billion in cash, or $7.69 a share.

Stone Fox Capital submits:Typically buyout news can be very bullish for the industry and competitors of the firm bought. Potentially less focused competition or even a higher premium for stand alone operators can be very positive. In the case of the airlines, that usually isn't the case. As soon as one airline leaves, another usually is born to take their place. Despite being a long term losing industry, airlines seem to never lack for new entrants.