UPDATE 1-FACTBOX-Southwest to buy low-cost rival AirTran

Mon Sep 27, 2010 3:59pm EDT

(Adds more information)

NEW YORK, Sept 27 (Reuters) - Southwest Airlines (LUV.N) said it would acquire low cost rival AirTran Holdings Inc AAI.N for about $1.04 billion in cash and stock to compete more closely with Delta Air Lines (DAL.N) and other big carriers in the eastern U.S. For details see [ID:nSGE68Q0GW]

Below are facts about the deal and the two carriers:

TRANSACTION

* The deal is worth $1.04 billion in cash and common shares, but jumps to nearly $1.4 billion when AirTran convertible notes are included.

* There is no estimate for when the transaction will close or how long antitrust officials at the U.S. Justice Department will take to review the proposal.

* Each AirTran share will be exchanged for $3.75 in cash and 0.321 shares of Southwest common stock, subject to certain adjustments intended to provide at least $7.25 in value and up to $7.75 in value per share of AirTran common stock.

SYNERGIES

* AirTran revenues and operating income, excluding special items, for the 12 months ending June 30, 2010, were $2.5 billion and $128 million, respectively. Southwest revenues and operating income, excluding special items, for the 12 months ending June 30, 2010, were $11.2 billion and $843 million, respectively.

* Net annual synergies are expected to exceed $400 million by 2013. One-time costs related to the acquisition and integration of AirTran are expected to be in the range of $300 million to $500 million.

* As of June 30, 2010, the combined unrestricted cash and short-term investments of the two companies was $3.7 billion. Southwest intends to fund about $670 million in cash consideration for the transaction out of cash on hand. Since June 30, Southwest's cash and short-term investments balance has increased from $3.1 billion to $3.3 billion.

OPERATIONS

* Based on current operations, the combined organization would have nearly 43,000 employees and serve more than 120 million passengers annually.

* The combined carriers' all-Boeing fleet would total 685 active aircraft, including 401 Boeing 737-700s, 173 Boeing 737-300s, 25 Boeing 737-500s, and 86 Boeing 717s, with an average age of approximately 10 years, one of the youngest fleets in the industry.

* Until closing, Southwest Airlines and AirTran will continue to operate as independent companies. After closing, AirTran CEO Bob Fornaro will continue to be involved in the integration of the two companies.

* Southwest Airlines plans to integrate AirTran into the Southwest Airlines Brand by transitioning the AirTran fleet to the Southwest Airlines livery and consolidating corporate functions into its Dallas headquarters. Frequent flier programs will be combined over time.

AIRLINE FACTS

* Southwest flies 3,200 flights a day to 69 U.S. cities. Headquartered at Dallas Love Field. Incorporated in 1971 with three aircraft serving three Texas cities. It currently operates 544 Boeing 737 jets, which fly an average of six flights a day. It has been profitable for 37 straight years.

* AirTran serves 71 cities, mostly on the U.S. East Coast, the Midwest and the Caribbean. Headquartered in Orlando, Florida, with a hub in Atlanta. Fleet includes 86 Boeing 717s, 52 Boeing 737s. First commercial carrier to offer XM Satellite Radio in every seat on every flight. Profitable nine out of last 10 years. Formerly ValuJet.

Source: Southwest.com, AirTran.com, Southwest Airlines, annual reports. (Editing by Maureen Bavdek, Bernard Orr)