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Southwest moving up with AirTran purchase

Southwest Airlines, the nation’s largest low-cost airline, plans to buy AirTran Holdings for $1.04 billion to expand into major East Coast markets as well as growth in the Caribbean.

Southwest Airlines, the nation’s largest low-cost airline, plans to buy AirTran Holdings for $1.04 billion to expand into major East Coast markets as well as growth in the Caribbean.

The cash and stock deal, announced early yesterday, is the first among leading low-cost airlines and represents a 69 percent premium over Friday’s closing price of AirTran stock.

The move jump-starts Southwest’s growth strategy, which was suspended in 2008 when the airline industry began slashing capacity to offset soaring fuel costs and sagging travel demand during an economic recession.

“The profit opportunity with this transaction is simply far greater than it is without,” Southwest Chief Executive Gary Kelly said.

The deal lifted shares of big carriers broadly, while low-cost rivals JetBlue, Alaska Airlines and Republic Airways Holdings rose sharply.

 
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