Southwest will buy AirTran in merger of low-cost rivals

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Southwest Airlines (LUV) said Monday that it will buy smaller rival AirTran Airways (AAI) for $1.4 billion, in a merger of low-cost carriers whose impact will be felt from fares to the number of flights available to millions of passengers.

The merger continues a trend of airlline consolidation, which has seen Continental and United Airlines announcing their intention to join operations Oct. 1, making it the largest airline in the world, and Delta and Northwest merging in 2008.

“The acquisition of AirTran represents a unique opportunity to grow Southwest Airlines’ presence in key markets we don’t yet serve and takes a significant step towards positioning us for future growth,” Southwest CEO Gary Kelly said.

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