In some instances the government has to take action to approve certain mergers with companies to make sure they are meeting their standards. That was the case with the merger with Southwest Airlines and AirTran Airways. These standards were created and continue to be enforced to make sure companies are doing cooperating with each other in integrity and a strict code of ethics. From the pending deal that finally took place in April of 2011 after The U.S. Department of Justice approved the merger between Southwest Airlines and AirTran.
In regards to their merger this article that I found in the Atlanta Journal stated: “Many fliers hope Southwest Airlines' arrival in the Atlanta market will lower travel costs, given the Dallas-based carrier's reputation as a fare-buster. The reality, however, may be less clear-cut. Southwest's pending buyout of AirTran Airways gained government approval Tuesday, and the two companies expect to close the deal next Monday. Southwest will quickly assume management control of AirTran, though the two airlines will remain separate operationally for several months to come. What happens to fares and service as they stitch those operations together will range from noticeable changes in some areas to not much at all in others, experts say. Some fliers might even pay more, they add. One clear effect of the deal: the eventual end of AirTran's checked luggage fees. Southwest doesn't charge for the first two bags. Southwest hasn't said when the policy takes effect for AirTran operations, but when it does it will mean an instant savings of at least $40 round-trip for those who check luggage --- assuming fares aren't boosted to offset it. Atlanta giant Delta Air Lines, which like most carriers also charges a separate fee for bag check, hasn't said how it will respond.”
I shared this article’s timeline from the Atlanta Journal because it provided some good insight of two great companies.
This article also gives a good explanation of the history between Southwest and AirTran when it showed us: A history of Southwest and AirTran:
1967: Texas investors incorporate Air Southwest Co., a commuter airline serving that state.
1975: Company goes public, name changes to Southwest Airlines.
1979: Southwest expands its reach beyond Texas, flying to New Orleans. That kicked off a long-steady route expansion.
1993: ValuJet Airlines is founded in Atlanta to fill a void in the air travel market after the collapse of Eastern Airlines.
1996: After fast growth and strong financial performance, the crash of ValuJet Flight 592 in the Florida Everglades, killing all 110 aboard, prompts government to temporarily ground the carrier.
1997: ValuJet, struggling since its resumption of service in late 1996, moves to buy a small Florida-based carrier called AirTran. It takes the AirTran name and Orlando headquarters as part of the merger. The new AirTran grows steadily, buys new planes and becomes a financial star in the industry.
Sept. 27, 2010: Southwest announces it will buy AirTran and enter the Atlanta market by taking over its hub here.
March 23, 2011: AirTran shareholders approve the sale.
March 28, 2011: AirTran airport workers and reservations agents vote to unionize, saying they don't want to go through a merger with Southwest without union protections.
April 26, 2011: The U.S. Department of Justice approves the merger, clearing the companies to close the deal.
The company as a whole saw some areas that were in need of change since fuel costs continued to rise and there was no getting around it. As stated earlier every airline company saw the same increase in fuel costs since they had no control over the price. With a unique strategy that was put in place to allow the company to still see growth at the end of the year, fuel costs increasing turned out not to be as big of a problem as it was for other companies. Reducing some of their winter flying was a smart decision to maintain their profitability.
I retrieved some interesting data from www.nytimes.com “The Southwest Airlines Company posted a smaller-than-expected quarterly profit Thursday, hurt by soaring fuel costs. The company said its fuel bill rose 64 percent from a year earlier, and it has reduced its winter flying schedule and 2012 capacity plans. The airline still expects 2011 capacity to grow 4 percent to 5 percent. Southwest said it earned $161 million, or 21 cents a share, in the second quarter, up from $112 million, or 15 cents a share, a year earlier. Excluding one-time items, profit was 15 cents a share, falling short of the 20 cents expected by analysts. Revenue rose 31 percent, to $4.1 billion. The airline industry has been battered this year by soaring fuel costs. While most major carriers posted profits for the second quarter, the fuel burden and concerns about travel demand in a weak economy have weighed on the airlines. “Given the pessimistic near-term outlook for fuel prices and the U.S. economy, we have re-evaluated our capacity plans,” the chief executive, Gary Kelly, said in a statement. Stock in Southwest, which is based in Dallas, fell 81 cents, or 8 percent, to $8.84 a share.”