SMF777

ATA is in a horrible position. A position that many have rumors and many would not have thought possible. Would in all possibilities a merger between Southwest Airlines and American Trans Air be feasible. It would seem as if Southwest Airlines has a much stronger clientele base. Southwest Airlines has witihin the past few years become a darling citizen of the city of Chicago and adding more and more flights in key merket!

Southwest Airlines has a much stronger route network than American Trans Air and can by far become a leader within the U.S. domestic air game with the compliment of Chicago/MDW, and Indianapolis operation bases. not to mention the impressive list of cities that Amerian Trans Air serves from Honolulu, San Francisco, Los Angeles, and New York/LGA!

Perhaps instead of keeping San Francisco, Southwest Airlines could move ops to SMF, SJC, and OAK in the San Francisco market. The Carribbean markets and Mexico markets could be given to the highest bidder -Whomever that may be!

American Trans Air - Could not be allowed to totally falter and in most cases would shrink to the size of OAI and operate only charter and DOD services! A decision that was dropped only a few years ago!


Any thoughts on the matter of Southwest Airlines joining forces with American Trans Air?

cabinpressure

WN hasn't indicated that they want to increase aircraft complexity and fly to Hawaii, the Carribbean, or prop-plane feeder markets. And while they operate out of some primary airports, with PHL the most recent example, they haven't indicated that they want to start flying to places like SFO, LGA, or DCA.

If WN *does* want to do any of those things, then this would be a good opportunity (i.e., start LGA, DCA, and Hawaii flights and sell off everything else), especially given WN already has operations in place at MDW and IND.

nsx

This goes beyond thinking outside the box: it's thinking outside the whole building! What would WN get with an ATA merger that it couldn't get by patiently waiting for most of its competitors to go Chapter 7? My guess is that just entering markets that the others abandon will provide more growth opportunities than Southwest can handle, and all without the added burden of others' debts and workforces.

Dan Burgess

From what I've read of WN executives discussing the aftermath of the Morris acquisition, I don't think another merger is going to happen. There are too many difficulties in absorbing personnel, much less aircraft and other assets.

It's more likely that Southwest will just continue to grow at a 7-10% clip for the foreseeable future.

StSebastian

This is also a near duplicate of a post in the NW threads. I doubt anyone would pick up an airline -- maybe specific routes, but with their own people and planes. If they need to hire some more, then they can selectively pick who they want from the other airline after it shuts down.

WN will be very careful in anything they do. A wholesale acquisition of an airline with significant issues, flying to Hawaii, the Caribbean, and potentially Germany is not something they'd suddenly jump on.

SMF777

Southwest Airlines would if this were to happen not allocate Hawaii - Instead Hawaii would go to someone else... Dare we say Northwest Airlines?

Southwest Airlines would not continue the Carribbean - Instead Caribbean would go to someone esle, if it would!

Southwest Airlines would not be flying to Europe. Odds are that OAI would be picking up the leftover DOD flights and any additional charters would be divided between OAI and World, perhaps even North American.

GeorgeJ

Didn't WN buy Muse Air back in the late 80's and operate it as a separate operation (forget what they called it when they changed the name). I believe the hub was in Houston and they flew to places like Florida that WN did not yet fly to. And it had a First Class cabin. Only lasted a year or two and then it folded.

Gold-Coaster

I agree with nsx. I know from working at an investment bank that one of the biggest risks of a merger is integrating the workforce, work practices, etc. Southwest doesn't strike me as a risk-taking company. I would guess that SWA'd wait for ATA to pull out and then bid on its gates at Midway in order to add more non-stop service from Chicago. SWA has the cash to outbid anyone. If you look at their interactive route map, you'll see that there is no non-stop service from Chicago to New Orleans, Jacksonville, Austin, San Antonio and Orange County, among others. Non-stop service to New Orleans would be fantastic. I also can't see SWA interested in the Caribbean. If it wanted to go international, it would have added Mexico a long time ago. There are plenty of growth markets for them domestically: Minneapolis, Atlanta, Cincinnati, Pittsburgh not to mention smaller cities like Grand Rapids or Des Moines. A Southwest presence at LaGuardia would be great too. The ride from Ronkonkoma into Penn Station with all the Victoria Gotti-wannabes can be fun, but I'd rather spend the hour and a half with a cocktail in the Village.

JerryFF

And also the HP forum.

ctuttle

Hmmm lets see

Option 1

Buy a failing carrier, at a premium over the value of the assets. You will now have to figure out a way to integrate the new employees into your system, figure out seniority, and possibly there will be some salary issues between the merged company and your company. You might have to eliminate some routes because of duplication or lack of profitability. You also have the risk of getting some aircraft that you just don't want or need. Corporate culture will be different between any other airline and Southwest. There will also be a period of time before the "merger" can be improved, and nobody likes uncertainty, and unless it is a great deal Southwest's stock price could suffer short term. Morale and profit will suffer.

Option 2

Wait and either purchase assets at a bankruptcy liquidation at bargain basement prices. If liquidation doesn't occur and flights are trimmed by the failing carrier, purchase the gates from the carrier who is in desperate need of cash. If you get new gates you can either hire new people for the additional flights, hire any employees terminated by the failing/failed carrier, or transfer people to avoid layoffs. New planes might make more economic sense than purchasing aircraft from failing or failed airline. Morale and profit could improve with the growth. Stock market might like the growth potential and stock goes up.

Can't see taking option 1 when option 2 is a possibility. Southwest is profitable, has money in the bank and can wait and only jump into a situation when it will be beneficial to them and their stockholders.

Dan Burgess

That's a good analysis, ctuttle, and I think you're right on the money.

Southwest is growing at a fair clip, they're profitable despite the troubles and uncertainty in the airline industry, and their employees are happy and productive.

I used to wish they'd acquire Vanguard or some other smaller mostly-737 airline, but as you point out, it's far easier just to grow the way they already have planned. With the scheduled aircraft deliveries in the next few years, Southwest is going to do just fine.

Tino

Why buy the cow when the steaks are almost free?

AlphaSigOU

True that...

silverkris168

Agreed. Southwest prides itself very much on its unique corporate culture and to acquire another airline would seriously cause a lot of disruption. I understand they actually like to hire people who don't come from the airline industry originally. They also seem to be focused enough not to tinker with their formula for success so far.

ejmelton

October 14, 2004 00:42:18 (ET)


NEW YORK, Oct 14 (Reuters) - America West Airlines (AWA,Trade) is in talks to acquire all or part of low-cost carrier ATA Airlines ((ATAH.O)), the Wall Street Journal reported on Thursday, citing unnamed sources.

The Journal, which spoke to people familiar with the matter, did not specify how much America West would pay for the debt-heavy, Indianapolis-based carrier, which is struggling to restructure its finances.

The report said that other airlines have shown interest in ATA, whose market value is about $31 million, with AirTran Airways -- a rival low-cost air carrier -- having held preliminary talks with the air carrier.