DALLAS, May 2, 2011 /PRNewswire/ -- Southwest Airlines
(NYSE: LUV) announced today that it has closed on its purchase of
all of the outstanding common stock of AirTran Holdings, Inc.
(NYSE: AAI), the former parent company of AirTran Airways
(AirTran).
"The successful closing of this transaction is a significant
accomplishment and marks a great day in the history of Southwest
Airlines. I want to thank the People from both Southwest and
AirTran who helped us achieve this important milestone," said
Gary Kelly, CEO, Chairman, and
President of Southwest Airlines. "Our first order of business
is to welcome our new friends from AirTran to the family in a truly
Southwest Airlines way.
"The acquisition of AirTran represents a unique opportunity to
extend our network into key markets we don't yet serve, such as
Atlanta and Washington, D.C., via Ronald Reagan National
Airport. It gives us the opportunity to serve more than 100 million
Customers annually from more than 100 different airports in the
U.S. and near-international destinations, providing Customers more
low-fare destinations as we diversify and expand the well-known
'Southwest Effect' to hundreds of additional low-fare itineraries
for the traveling public. Today, we also celebrate the promise of
expanding our presence at New York LaGuardia, Boston Logan,
Milwaukee, and Baltimore/Washington, as well as extending our
service to many smaller domestic cities that we don't serve today,
with access to key near-international leisure markets in the
Caribbean and Mexico," Kelly said.
"The timing of today's closing in the current market environment
could not be more important," he continued. "With soaring fuel
costs putting many airlines, yet again, in the red, Southwest
brings many strengths to bear. Southwest not only brings
profitability and financial strength to make this deal feasible,
but it also positions the combined companies with an
industry-leading investment grade balance sheet to weather the
energy-price storm. In addition, it currently positions Southwest
to offer improved job security, compensation, and benefits to
AirTran Crew Members who join the Southwest family. Further,
Southwest's profitability and financial strength, along with
the United States' largest Low
Fare network, puts AirTran Crew Members in a position to be part of
a growing company again, once AirTran is integrated into
Southwest."
Transaction Information
Based on the average of Southwest Airlines' closing prices for
the 20 trading days ending three trading days prior to May 2, 2011, of $11.90, the transaction values AirTran common
stock at approximately $7.57 per
share, or $1.0 billion in the
aggregate, excluding shares issuable upon conversion of AirTran's
outstanding convertible notes*. Each share of AirTran common
stock will be exchanged for $3.75 in
cash and 0.321 shares of Southwest Airlines' common stock.
Assuming no conversion of AirTran's outstanding convertible
notes*, AirTran stockholders will receive 44 million shares of
Southwest Airlines common stock, which will represent 5.6 percent
of the Southwest Airlines common shares outstanding.
Additionally, they will receive cash of $518 million. Including the existing
AirTran net indebtedness (including outstanding convertible notes)
and capitalized aircraft operating leases, the total transaction
value is $3.2 billion.
The transaction, including the anticipated benefit of net
synergies, but excluding the impact of one-time acquisition and
integration costs, is expected to be accretive to Southwest
Airlines pro forma fully-diluted earnings per share in the first
twelve months after today's close and strongly accretive upon full
realization of net synergies. Net annual synergies are estimated to
exceed $400 million by 2013. One-time
costs related to the acquisition and integration of AirTran are
currently estimated to be approximately $500
million.
AirTran revenues and operating income for the twelve months
ending December 31, 2010, were
$2.6 billion and $128 million, respectively. Southwest
Airlines revenues and operating income for the twelve months ending
December 31, 2010, were $12.1 billion and $988
million, respectively. As of March
31, 2011, the combined unrestricted cash and short-term
investments of the two companies was approximately $5.0 billion. Southwest's funding for the
transaction will be from its cash on hand. In addition,
Southwest Airlines has a fully available, unsecured revolving
credit facility of $800 million.
Southwest Airlines is committed to keeping all stakeholders
updated on the progress of the integration process and intends to
provide an update, in that regard, in conjunction with its second
quarter earnings announcement, currently scheduled for August 4, 2011.
Leadership
Bob Jordan, Southwest's Executive
Vice President of Strategy and Planning, will serve as President of
AirTran effective today. Bob
Fornaro, who has served as Chairman, President, and CEO at
AirTran, will move to a new key role today as a full-time
consultant for the integration of the two airlines, working closely
with Kelly and Jordan to ensure a smooth transition. As previously
announced, Southwest Airlines' headquarters will remain in
Dallas, with plans for AirTran's
operations and presence in both Orlando and Atlanta still under review. Additional
announcements during the integration will be made as plans
unfold.
Jordan will continue to serve on the joint Integration Board
consisting of Kelly, Fornaro, Mike Van de
Ven (Southwest Executive Vice President & Chief
Operating Officer), Loral Blinde (AirTran Senior Vice President
Human Resources and Administration), and Jeff Lamb (Southwest Senior Vice President of
Administration & Chief People Officer). The Integration Board
will continue to provide overall direction of the integration
efforts.
Until a Single Operating Certificate (SOC) is secured from the
Federal Aviation Administration, AirTran operational Departments
will continue operating under the AirTran operating certificate
with the full authority of its operating teams led by Klaus Goersch, AirTran's Executive Vice
President Operations and Customer Service. Goersch will report
directly to Jordan, and will work closely with Mike Van de Ven.
The remainder of the leadership structure will be communicated
at a future date.
Customer Experience
Southwest and AirTran will immediately begin the work to
integrate AirTran into Southwest Airlines. However, AirTran
will continue to operate under the AirTran brand with its same
policies, procedures, and product features for a period of time.
Southwest plans to integrate AirTran into Southwest Airlines
over time by transitioning the AirTran fleet to the Southwest
Airlines livery, developing a consistent Customer Experience, and
transitioning the operations of the two carriers onto a Single
Operating Certificate. Southwest currently expects it will
obtain a SOC in the first quarter of 2012 and estimates it will
take several years to fully transition AirTran into Southwest
Airlines to become one airline.
In the near term, Customers can expect to interact with each
carrier as they always have. Customers flying on AirTran will
continue to make reservations or check in at airtran.com or
by calling 800-247-8726, and visit AirTran kiosks and ticket
counters. AirTran Crew Members (employees) will assist on
scheduled AirTran flights. Customers flying on Southwest will
continue to make reservations or check in at southwest.com
or by calling 800-435-9792, or at Southwest kiosks and ticket
counters. Southwest Employees will assist on scheduled
Southwest flights. Customers will continue to earn and redeem
through the respective frequent flier loyalty programs, as they do
today, until those programs are combined over time.
Southwest plans to provide the ability for Customers to connect
across the networks and integrate key Customer Service policies for
a more consistent Customer Experience, in the fall or early next
year, depending on both companies' readiness. Any changes to the
Customer Experience on either carrier will be communicated in
advance via southwest.com, airtran.com, and in direct
Customer communications.
Celebrating our Employees
"Today's closing is an important first step to fulfilling our
mission to spread low fares farther and increase competition
throughout the airline industry," Kelly said. "Our progress, to
date, on integration planning has been outstanding. Without
our Employees' hard work and enthusiasm about this acquisition, we
would not have reached this point. As we now take it to the
next level and begin to implement our integration plan, their
continued efforts will be key to our success. I have confidence in
our People and their ability to successfully execute these
plans."
Kelly, Jordan, Fornaro, and leaders from both airlines today
will host celebratory events in all mainland locations for both
Southwest and AirTran. Following the closing, the three executives
departed Southwest's Dallas
headquarters for Atlanta,
AirTran's largest Crew Member (employee) location, onboard an
AirTran jet. The team will host an afternoon event for Employees at
AirTran's maintenance hangar there. The event will be webcast live
for Employees and watched in such locations as Baltimore/Washington, Milwaukee, and Orlando, where the carriers each have a
significant presence.
Live Webcast
Southwest and AirTran will provide a multimedia, live stream
webcast of the day's events in Dallas and Atlanta, as well as other video material
featuring Southwest Leaders and Employees of both carriers, at
http://www.ustream.tv/channel/southwest-airlines-headquarters. The
material will be archived and available to view later on the same
site.
Additional photos, videos, fact sheets, and other resources are
available at lowfaresfarther.com and at Southwest's digital
newsroom, swamedia.com.
About Southwest Airlines
In its 40th year of service, Southwest Airlines continues to
differentiate itself from other low-fare carriers--offering a
reliable product with exemplary Customer Service. Southwest
Airlines is the nation's largest carrier in terms of originating
domestic passengers boarded, now serving 72 cities in 37 states
with the addition of service to Newark Liberty International
Airport on March 27, 2011. Southwest
also is one of the most honored airlines in the world known for its
commitment to the triple bottom line of Performance, People, and
Planet. To read more about how Southwest is doing its part to be a
good citizen, visit southwest.com/cares to read the Southwest
Airlines One Report™. Based in Dallas, Southwest currently operates more than
3,400 flights a day and has more than 35,000 Employees
systemwide.
About AirTran Airways
AirTran Airways is a wholly owned subsidiary of Southwest
Airlines Co. and has been ranked the top airline in the Airline
Quality Rating study twice in the past four years. AirTran is
the only major airline with Gogo Inflight Internet on every flight
and offers coast-to-coast service on North America's newest all-Boeing fleet.
AirTran's low-cost, high-quality product also includes assigned
seating, Business Class and complimentary SiriusXM Satellite Radio
on every flight. To book a flight, visit airtran.com.
*Pursuant to the terms of
the indentures governing AirTran's 5.50% Convertible
Senior Notes Due 2015 and 5.25% Convertible Senior Notes Due 2016,
holders of such notes may surrender their notes for conversion
at any time during the applicable make-whole conversion
period. That period began on April 11,
2011 and ends on a date that will be publicly announced in a
Notice to be sent to each Holder within 15 business days after
today. Including shares issuable upon conversion of these
series of outstanding convertible notes, AirTran stockholders will
receive 57 million shares of Southwest Airlines common stock, which
will represent 7.1 percent of the Southwest Airlines common shares
outstanding. Based on AirTran's common shares outstanding and
assuming conversion of AirTran's outstanding convertible notes,
AirTran stockholders will also receive $671
million in cash.
Cautionary Statement Regarding Forward-Looking
Statements
This news release contains forward-looking statements related to
Southwest's acquisition of AirTran Holdings, Inc. Specific
forward-looking statements include without limitation statements
related to Southwest's integration plans and the anticipated impact
of the acquisition on (i) the future operations of Southwest
Airlines and AirTran Airways; (ii) Southwest's growth
opportunities; (iii) the Southwest and AirTran Customer experience,
offerings, and benefits; (iv) Southwest's results of operations,
including expected synergies and the projected earnings impact of
the acquisition; and (v) employee matters. These forward-looking
statements are based on Southwest's current intent, beliefs,
expectations, and projections and are not guarantees of future
performance. These statements involve risks, uncertainties,
assumptions, and other factors that are difficult to predict and
that could cause actual results to vary materially from those
expressed in or indicated by them. Factors include, among others,
(i) Southwest's ability to successfully integrate AirTran's
business and realize the expected synergies from the acquisition;
(ii) the impact of fuel prices and economic conditions on
Southwest's business plans and strategies; (iii) the impact of the
economy on demand for air travel and fluctuations in consumer
demand generally for the services to be provided as a result of the
acquisition; (iv) actions of competitors, including without
limitation pricing, scheduling, and capacity decisions, and
consolidation and alliance activities; (v) the impact of
governmental regulations on Southwest 's operations; and (vi) other
factors, as described in Southwest's filings with the Securities
and Exchange Commission, including the detailed factors discussed
under the heading "Risk Factors" in the Company's Annual Report on
Form 10-K for the fiscal year ended December
31, 2010.
SOURCE Southwest Airlines
