Southwest Airlines Buys AirTran to Spread Low Airfares, Not to Boost the Industry
Typically buyout news can be very bullish for the industry and competitors of the firm bought. Potentially less focused competition or even a higher premium for stand alone operators can be very positive. In the case of the airlines, that usually isn't the case. As soon as one airline leaves, another usually is born to take their place. Despite being a long term losing industry, airlines seem to never lack for new entrants. Today's news that Southwest Airlines (LUV) is willing to buyout AirTran (AAI) for a roughly 69% premium is huge for shareholders of both companies and especially AAI. This deal allows LUV to more effective compete in the NorthEast not to mention to enter markets such as Atlanta. Does that make JetBlue (JBLU) or American Airlines (AMR) an attractive acquisition now that one competitor is gone? Hmm, more and stronger competition from LUV doesn't seem ideal. The headline of their press release says it all " Southwest Airlines to Acquire AirTran; Spre...