Will US AIRWAYS outbid Southwest for AirTran?

[IberiaMAL]

AirTran Opens Up the Revenue Floodgates for Southwest

On September 27, Southwest announced that it will buy AirTran for $1.4 billion. The acquisition finally gives Southwest that coveted spot in Atlanta, as well as residence in 36 new airports. “Just by acquiring [AirTran] it allows us to expand our network 25%,” said Southwest spokesman, Paul Flanigan.

That’s potentially 25% more routes… 25% more destinations… and most importantly 25% more customers. Practically overnight. Not only that, it gives Southwest access to new international routes in Mexico and the Caribbean – a first in the company’s 40-year history.

Tom Parsons, CEO of BestFares.com, referred to the deal as “a coup for both airlines and a win for John Q. Public.” But what about investors?

An “Extremely Big Competitive Force”

According to former airline executive, Paul Mifsud, the elimination of low-cost rival AirTran as a competitor is a definite game-changer. “[Southwest and AirTran] are going to become an extremely big competitive force in the domestic industry,” he said.

There’s a precedent for this, too.

In 2008, when Delta began to absorb Northwest (NWA), there were obviously initial growing pains. By the middle of that year, Delta shares were languishing around $4. But today, the share price is around $12, having hit a 52-week high of $14.94 in April.

Breaking it down further, Southwest and AirTran generated combined revenue of $13.7 billion in the 12 months ending June 30. And Southwest projects more than $2 billion in additional revenue this year, thanks to the acquisition, as its low fares appear in new airports like Atlanta. And that will allow Southwest to strengthen its position in major East Coast business hubs.

In fact, once their operations are combined, Southwest and AirTran will do business from more than 100 airports. To compare, competitor JetBlue (Nasdaq: JBLU) has gates in just over 60.

That immediate network growth means Southwest will realize a faster-than-normal return on its investment – and so could investors.

WN is a very competitive force.

They Challenge:

US @ PHL, PHX, BWI/DCA, LAS
UAL @ ORD/MDW, IAH/HOU, DEN, LAX, IAD/BWI
AMR @ DFW/DAL, ORD/MDW, FLL/MIA, LAX, STL, RDU
DAL @ ATL, SLC, IND, MKE
Alaska @ PDX, SEA
B6 @ MCO, FLL,



No other airline can challenge every single airline in the industry - save Hawaiian - in such a competitive way.

Of course they are a big force to reckon with.



And I would hope revenue floodgates are opened by purchasing AirTran...

 

[AstroLounge]

Really Never Understood this great Lovefest that some people have with Southwest. Personally, they would be MY L-a-s-t Choice in picking an airline. I don't care for ANY THING about them. Not a fan of the CattleCar Boarding, their tacky chic whatever the hell you want to call it business operandi and that latest commercial they have airing is SWA in a nutshell. They would never be considered in MY Business plans. Too many people give them WAAAAAAAAAAAAAAAAAAAAY too much credit. As a domestic carrier they may be an option for some people but they would never be My Choice. They sort of remind me of Starbucks..........some people RAVE about that crap........I think it's NASTY crap fit for the drain. When I think of airline travel I look to established carriers that have some sort of class and style..........and "move about the cabin" is FAR From it. I generally never single out individual companies to launch an attack on but this LOVEFEST is so nauseating it really chaffes my * to no end. And I am sure Delta will hold their own on the 'Big Bad Wolf' coming to Atlanta.

 

[BoeingBoy]

Really Never Understood this great Lovefest that some people have with Southwest. Personally, they would be MY L-a-s-t Choice in picking an airline.

That's why having choices is good - you don't have to ride SW unless you want to.

Jim

 

[john john]

Really Never Understood this great Lovefest that some people have with Southwest.

No fees
Reliability
No RJ’s or props

 

[usa1]

At one time WN mostly cherry picked routes and didn't offer the business traveler consistent coverage, especially on the east-coast .... boy is that changing fast. Now basically having connecting hubs in ATL, BNA, BWI, MKE, PHX, DFW, DEN, MDW, STL, LAS. Plus some large focus cities in Texas and elsewhere!

http://www.southwest.com/travel_center/routemap_dyn.html

http://www.airtran.com/route-map/city_information.aspx

I think I see the handwriting on the wall..... merger US/AA.

 

[BoeingBoy]

Just in the last two days I read an article that WN is attracting more business travelers - 40% of WN passengers are classified as such now. With the FL merger giving WN more access to LGA and DCA, I can see them offering more non-stop service to each from business destinations than FL does.

Jim

 

[Dog Wonder]

that latest commercial they have airing is SWA in a nutshell.

Their commercials wear better than the 'perception is not reality' US Airways is trying to sell.

 

[LD3]

I think I see the handwriting on the wall..... merger US/AA.

Is this even realistic? Given the way Tempe has handled HP/US marriage, how would AA being thrown into the mix even work? I guess the Empire uniform is getting tired of the Piedmont & US uniform hanging around and is hoping for a new AA uniform to play with. 😀

 

[jimntx]

Really Never Understood this great Lovefest that some people have with Southwest. Personally, they would be MY L-a-s-t Choice in picking an airline. I don't care for ANY THING about them. Not a fan of the CattleCar Boarding, their tacky chic whatever the hell you want to call it business operandi and that latest commercial they have airing is SWA in a nutshell. They would never be considered in MY Business plans. Too many people give them WAAAAAAAAAAAAAAAAAAAAY too much credit. As a domestic carrier they may be an option for some people but they would never be My Choice. They sort of remind me of Starbucks..........some people RAVE about that crap........I think it's NASTY crap fit for the drain. When I think of airline travel I look to established carriers that have some sort of class and style..........and "move about the cabin" is FAR From it. I generally never single out individual companies to launch an attack on but this LOVEFEST is so nauseating it really chaffes my * to no end. And I am sure Delta will hold their own on the 'Big Bad Wolf' coming to Atlanta.

The truth is that Herb Kelleher is/was a genius. And one of the most important things he did was manage customer expectations. From the very beginning on WN, it was clear that you were purchasing transportation from Point A to Point B, and as jam on the bread, if it isn't too turbulent you will also get a plastic cup of Coke and a bag of peanuts. No more, no less.
The rest of us were selling the "experience of air travel." Well, when we decided we could no longer afford the "experience"--meals in coach, free checked bags, assigned seats, etc., it was too late. The public wants us to still provide that experience but at a "transportation from Point A to Point B" price.

Another point of genius is that WN has always charged a reasonable fare. Not necessarily the lowest fare, but always a reasonable one. That translates in the public's mind to the lowest fare anyway because WN doesn't have any of the last minute walkup $700 one-way from PHL to BOS or DFW to IAH kind of stuff that the rest of us do.

You can look down your nose at WN all you want. But, the truth is, you can not argue with success. No other airline has ever come close to a record like 17 straight years without a single quarterly loss.

 

[USFlyer]

Is this even realistic? Given the way Tempe has handled HP/US marriage, how would AA being thrown into the mix even work? I guess the Empire uniform is getting tired of the Piedmont & US uniform hanging around and is hoping for a new AA uniform to play with. 😀

FWIW, the merger between HP and US has been a success. We keep acting as if it hasn't been. But, whether we like it or not, US has shown its resilience to not only weather the economic downturn but produce a very nice profit at the same time. I don't put the pilot situation on Tempe ... that's a union matter the company is trying to stay out of as much as reasonably possible.

 

[Travelpro72]

FWIW, the merger between HP and US has been a success. We keep acting as if it hasn't been. But, whether we like it or not, US has shown its resilience to not only weather the economic downturn but produce a very nice profit at the same time. I don't put the pilot situation on Tempe ... that's a union matter the company is trying to stay out of as much as reasonably possible.

Yes all a success riding on the backs of broken down, tired and abused employees working for a hell of a lot less than the big competitors. No? 🙄 Hell who wouldn't want the company they work for to succeed and feel proud? I sure would but not like this. Sorry! ! !

 

[SparrowHawk]

Yes all a success riding on the backs of broken down, tired and abused employees working for a hell of a lot less than the big competitors. No? 🙄 Hell who wouldn't want the company they work for to succeed and feel proud? I sure would but not like this. Sorry! ! !

Sadly as a customer who believes in the WN mantra of Employee satisfaction = Customer Satisfaction = Superior return on investment I would argue that the US/HP merger has been an abject failure on multiple levels.

Back when I was in OLD US's good graces (Pre-Enema kit) we were told that the net cost of glassware in F was 3.9 million. A number I believe BTW. So with a bigger airline let's say it's 5 million now. I could be OK with no glassware in F if that 5 million was put into F/A raises. But in the Tempe Frat Boys pocket? NO FREAKIN' WAY!!!!

I can count many many times that the front liners kept me loyal DESPITE the best efforts of the Tempe Frat Boys and their spreadsheet mentality.

NOW? Screw'em!!! They aren't bidding for Air Tran anymore than I'll be 27 tomorrow.

 

[john john]

Sadly as a customer who believes in the WN mantra of Employee satisfaction = Customer Satisfaction = Superior return on investment I would argue that the US/HP merger has been an abject failure on multiple levels.


I can count many many times that the front liners kept me loyal DESPITE the best efforts of the Tempe Frat Boys and their spreadsheet mentality.

NOW? Screw'em!!! They aren't bidding for Air Tran anymore than I'll be 27 tomorrow.

Lets not kid ourselves US is making money because of the service/charge FEES and fear to collect them

 

[USFlyer]

Yes all a success riding on the backs of broken down, tired and abused employees working for a hell of a lot less than the big competitors. No? 🙄 Hell who wouldn't want the company they work for to succeed and feel proud? I sure would but not like this. Sorry! ! !

Welcome to what workers all over the US are feeling. This isn't unique to US. It's the new reality for many of us and I don't see it changing anytime soon.

 

[PHLfa88]

Lets not kid ourselves US is making money because of the service/charge FEES and fear to collect them

Really? Have you flown an airline called Vueling? They are a Spanish airline..Check them out..Really!! Talk about charging for Everything..They even charge 8 euros to charge your ticket!! Go ahead..check them out.. vueling.com