Promotion and advertising strategies
Running head: MERGERS AND ACQUISITIONS
Mergers and Acquisitions
Southwest Airlines Acquires Air Trans Airways
Dr. Penny Wilkins
BUS 508: Contemporary Business – Assignment #2
May 17, 2014
Mergers and Acquisitions
Southwest Airlines Acquires Air Trans Airways
In 1966, while sitting in a small diner, Rollin King, a Texas businessman presented his attorney, Herb Kelleher with an idea. The idea entailed creating a new airline, one that would offer low fares to passengers and would fly quickly between three cities: Dallas, Houston, and San Antonio. Together, they formed Southwest Airlines. Initially, the airline battled a number of obstacles from various competitors of that time, as the other airlines did not want to see a new competitor in the market who offered low cost flights to local areas. Despite various attempts made to keep Southwest a mere vision, they legally won the right to fly through the Supreme Court and began offering air service in 1971.
AirTran Airways, formerly known as ValuJet Airlines, first began operating October 26, 1993. The Airline was renamed after the 1996 crash of ValuJet into the Florida Everglades, killing all 110 passengers and crew members on board. Since that time, AirTran has grown to be one of the most profitable airlines in the industry, offering service to more than 60 destinations across the United States, as well as to Mexico and the Caribbean.
On September 27, 2010, AirTran Airways made a public announcement that they entered into agreement allowing Southwest Airlines to acquire them. Numerous entities report the reasons behind the acquisition are: to make Southwest a dominant competitor in the airline industry, “Southwest is following the trend in the industry: merge or acquire in order to stay alive and competitive” (Mouawad, 2010). In addition, the acquisition would allow Southwest to mark its presence in markets they were previously unable to penetrate, “The deal would expand Southwest’s
Mergers and Acquisitions
Southwest Airlines Acquires Air Trans Airways
Dr. Penny Wilkins
BUS 508: Contemporary Business – Assignment #2
May 17, 2014
Mergers and Acquisitions
Southwest Airlines Acquires Air Trans Airways
In 1966, while sitting in a small diner, Rollin King, a Texas businessman presented his attorney, Herb Kelleher with an idea. The idea entailed creating a new airline, one that would offer low fares to passengers and would fly quickly between three cities: Dallas, Houston, and San Antonio. Together, they formed Southwest Airlines. Initially, the airline battled a number of obstacles from various competitors of that time, as the other airlines did not want to see a new competitor in the market who offered low cost flights to local areas. Despite various attempts made to keep Southwest a mere vision, they legally won the right to fly through the Supreme Court and began offering air service in 1971.
AirTran Airways, formerly known as ValuJet Airlines, first began operating October 26, 1993. The Airline was renamed after the 1996 crash of ValuJet into the Florida Everglades, killing all 110 passengers and crew members on board. Since that time, AirTran has grown to be one of the most profitable airlines in the industry, offering service to more than 60 destinations across the United States, as well as to Mexico and the Caribbean.
On September 27, 2010, AirTran Airways made a public announcement that they entered into agreement allowing Southwest Airlines to acquire them. Numerous entities report the reasons behind the acquisition are: to make Southwest a dominant competitor in the airline industry, “Southwest is following the trend in the industry: merge or acquire in order to stay alive and competitive” (Mouawad, 2010). In addition, the acquisition would allow Southwest to mark its presence in markets they were previously unable to penetrate, “The deal would expand Southwest’s
References: Advance Business Consulting Website (2013). Retrieved from http://www.advancebusinessconsulting.com/advance!/strategic-alignment/strategic-alignment-business-cases/the-rise-of-southwest-airlines.aspx AirTran Airways Official Website, (2014). Retrieved from http://www.airtranairways.com/about-us/history.aspx Atlanta Business Chronicle, (2010). Q&A on the Southwest-AirTran merger. Retrieved from http://www.bizjournals.com/atlanta/stories/2010/09/27/daily2.html Boehmer, Jay (2010, November 08). Delta Sees Opportunity In Southwest, AirTran Merger. Business Travel News, (15), 4. Retrieved from http://elibrary.bigchalk.com Bomkamp, S., (2010). Huff Post Travel: Southwest Airlines Buys AirTran for $1.4 Billion. Retrieved from http://www.huffingtonpost.com/2010/09/27/southwest-airlines-airtran_n_739975.html?view=print&comm_ref=false Cappelli, P. (2010). Strategic Management North America: By Acquiring AirTran, Will Southwest Continue to Spread the LUV? Retrieved from http://knowledge.wharton.upenn.edu/article/by-acquiring-airtran-will-southwest-continue-to-spread-the-luv/ McCartney, S., (2013). The Wall Street Journal: Southwest and AirTran Airlines: Mergers and Aggravations. Retrieved from http://online.wsj.com/news/articles/SB10001424127887324448104578611980670019710 Mouawad, J., (2010). The New York Times: Southwest, Determined to Expand, Buys AirTran. Retrieved from http://www.nytimes.com/2010/09/28/business/28air.html?_r=0&pagewanted=print PBS.Org (date not available). Chasing the Sun: The History of Commercial Aviation Seen Through the Eyes of Its Innovators. Retrieved from http://www.pbs.org/kcet/chasingthesun/innovators/hkelleher.html Southwest Airlines Official Website. (2014). Retrieved from http://www.southwest.com/html/about-southwest/index.html?int=GFOOTER-ABOUT-ABOUT