AVIATION/ SOUTHWEST TO BUY AIRTRAN

SOUTHWEST AIRLINES is to further consolidation in the US Airline industry through the acquisition of fellow low-fare carrier AIRTRAN AIRWAYS. In a definitive agreement announced this morning and endorsed by both the boards of both Airlines, Southwest is purchasing all outstanding common stock of AirTran's parent for a combination of cash and stock. Under the agreement each share of AirTran common stock will be exchanged for $3.75 in cash and 0.321 shares of Southwest's common stock. Including AirTran's debt and capitalized aircraft operating leases, the transaction is valued at $3.4 billion. Through the agreement Southwest gains key access to Washington National Airport and expands its presence in other key markets including New York La Guardia and Boston. It also furthers Southwest's goals of serving near international destinations through AirTran's leisure markets in the Caribbean. Until closing, Southwest and AirTran will continue to operate as separate brands. Southwest plans to integrate AirTran's Boeing 737s and 717s into its own 737 livery and consolidating corporate functions at its Dallas headquarters. The 2 carriers also plan to transition to a single operating certificate and will operate a combined fleet of 685 aircraft.