For the first time ever, domestic top-notch carrier
Southwest Airlines Co.
) introduced flights to five cities in one day. This move
underlines the company's endeavors to expand its foothold outside
the 48 contiguous states and the continuous success of the
ongoing integration of AirTran Airways.
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From Apr 14, Southwest commenced nonstop services from Charlotte
to Baltimore/Washington, Chicago (Midway), Houston (Hobby), and
Orlando; from Flint to Baltimore/Washington, Orlando, and Tampa
Bay; from Portland, Maine to Baltimore/Washington; from
Rochester to Baltimore/Washington, Chicago (Midway), Orlando, and
Tampa Bay; and lastly, from San Juan to Orlando and Tampa Bay.
Southwest, with its superior customer services and affordable
prices, aims to have a robust operational base in these cities
that were earlier served by AirTran Airways. The latter stopped
operating at Charlotte, Flint, Portland (Maine), and Rochester
airports on Apr 13. However, AirTran Airways will continue to fly
jets between San Juan and Baltimore/Washington, Fort
Lauderdale/Hollywood, and Atlanta. Southwest is slated to take
over AirTran's San Juan service to Fort Lauderdale/Hollywood on
Sep 29, 2013.
In May 2011, Southwest completed the acquisition of AirTran
Holdings, which now operates as a wholly owned subsidiary under
the name AirTran Airways. Though Southwest and AirTran are still
operating as separate entities, the single operating certificate
obtained in March, last year, allows the company to combine their
The AirTran integration procedure is on track for completion by
the end of 2014. At 2012-end, Southwest converted 11 AirTran 737
- 700s aircraft into its livery. Further, Southwest completed the
integration of Finance and Human Resources systems (SAP) and
brought in 26% of the AirTran workforce under its wings.
We expect the AirTran merger to be accretive to Southwest's
earnings when realized fully. The company realized net,
annualized, pre-tax synergies of $142 million in 2012 and the
transaction is expected to generate net synergies of more than
$400 million by year-end 2013.
Southwest - which carries the maximum number of U.S. passengers
compared to any other player such as
United Continental Holdings
Delta Air Lines Inc.
) - currently holds a Zacks Rank #3, implying a Hold rating.