The Daily Update: Tuesday, May 3

May 3, 2011 by · Comments Off 

The Daily Update: Tuesday, May 3 from SMUDailyMustang.com on Vimeo.

The Dallas Love Field airport is getting a face lift. Education budget cuts may cause more students to apply for student loans, and The Daily Campus and The Daily Mustang are merging. Find out all this and more on your Daily Update.

Low Fares Even Lower? Southwest Airlines and AirTran Merge

November 2, 2010 by · Comments Off 

By Liz Collinsworth
lcollinswo@smu.edu

Southwest Airlines entered its biggest acquisition ever with the announcement of its merger with AirTran on September 27. Southwest has agreed to acquire its smaller low-fare rival for $1.4 billion in cash and stock. The merger will add 37 new destinations to Southwest’s network, for a total of 100 including a hub in Atlanta and the introduction of international flights.

According to the Spreading Low Fares Farther website, a site developed by Southwest to inform public about the merger, the deal will mean a first ever hub in Atlanta for Southwest, the addition of business markets such as New York La Guardia, Washington Reagan, and Boston Logan, the opportunity to serve smaller markets, and Southwest’s first time access to international destinations.

The merger is currently subject to approval of U.S. Department of Justice regulators and AirTran stockholders. Following approval, Southwest and AirTran plan to integrate within two years.

While Southwest says the deal will mean an expansion of its low-fare approach, critics say it may end up costing passengers—and employees.

According to “Southwest Airlines-AirTran Merger Details,” a blog on stockbloghub.com, “The merger may result in increase in fares, elimination of jobs and might pose major challenges to carriers, especially American Airlines.”

“Gary Kelly of Southwest Airlines is quite adamant that the merger won’t reduce jobs or, by itself, raise fares. He qualifies his statement by noting that cost pressures are forcing Southwest and other airlines to raise fares to cover their higher costs,” said Terry Maxon, airline writer for the The Dallas Morning News.

George Hobica of airfarewatchdog.com believes that the merger will eliminate jobs.

“Some employees will lose their jobs, mainly in functions such as PR, marketing, advertising, procurement, etc. But I doubt many pilots, flight attendants, baggage handlers and so forth will lose jobs, unless the economy takes a turn for the worse,” said Hobica.

Southwest estimates that this deal will provide flyers with the opportunity to save hundreds of millions of dollars annually on airfares. Hobica disagrees with Southwest’s claim, noting that AirTran was already a heavy discounter. Maxon, however, believes that this claim is dependent upon what terms it is based on.

“If the claims are based on what Southwest will charge compared to what AirTran charges, it is hard to make that case. If Southwest is basing the claim on the idea that many more travelers will be exposed to its fares that at present do not have access to Southwest or AirTran fares, its case is stronger,” said Maxon.

Maxon also noted that Southwest does not impose secondary charges such as baggage fees and reservation change fees while AirTran has embraced such fees.

“Between April 1, 2009, and June 30, 2010, AirTran collected $189 million in bag fees alone. All other things being equal, its passengers would have paid $189 million less to travel on Southwest because Southwest doesn’t charge for the first or second checked bag,” said Maxon.

Laura Wright, Southwest’s chief financial officer, believes that, once the merger is completed, Southwest’s annual savings will exceed $400 million by the year 2013.

“The combined revenue for the two companies for the 12 months ended June 30, 2010, was $13.7 billion. To put it into perspective, $400 million of net synergies would equate to approximately 3% of the combined companies’ 12 months ended June 30, 2010 top line revenues,” Wright said in a September 27 analyst call.

Despite an increase in fuel costs and remaining economic struggle for airlines, Southwest has maintained revenue growth. Southwest ended its previous quarter with operating income of $363 million, a 195.1 percent increase from the same period last year, and net income of $112 million, a 23.1 percent increase from last year.

These increases are a result of more efficient operations, an increase in passengers, and better management of operating expenses. Competitor American Airlines generated a 16 percent increase in operating revenue last quarter and its net loss shrank to $10.7 million from $390 million from the same quarter a year ago.

Observers predict that the merger will threaten competitors. Hobica believes the merger will “cause some heartburn over at Delta headquarters,” and that “Delta may have to rethink the fees for bags, etc. on flights to/through/from Atlanta.”

A report released by Soleil Securities predicts a “more profitable deployment of flights to a broader to a broader range of destinations that will have some negative impact of DAL (Delta Airlines).”

J.P. Morgan, on the other hand, issued an airline industry report on September 28 claiming that “Delta (is) not uniquely threatened,” by the merger.

Campus News Blog: Southwest Merger with AirTran May Benefit You

September 30, 2010 by · Comments Off 

Posted By Kassi Schmitt

Dallas-based Southwest Airlines announced Monday that it is buying AirTran for $1.4 billion. The merger of these two airlines will become the nation’s fourth-largest carrier, but what does that mean for you?  

1). Better service! We all know Southwest employees ensure great service, whether you’re on the ground or thousands of miles in the air.

2). The new airline would expand its locations and operate from more than 100 airports and serve more than 100 million customers according to an article from The Dallas Morning News. (However, the deal would remove AirTran from DFW, currently one of the cheapest carriers because of a deal with Southwest at Love Field.)

3). It’s great news for your wallets as Southwest and AirTran don’t have much flight overlap, so the merger won’t lead to higher fares.

4). Who’s in for some fun in the sun? Southwest would become an international airline if it keeps AirTran’s flights to Aruba, the Bahamas, etc. 

5). Because it’s only inevitable, if your flight is delayed or canceled you can now be re-routed thanks to a much larger route structure.

6). Unfortunately, it’s goodbye to AirTran’s business class cabin seats as Southwest will most likely move the airline to its one-cabin model and open-seat boarding process.

6). This also means that AirTran will lose its brand and will operate entirely under Southwest’s logo and colors.

The merger will NOT take affect right away. Southwest and AirTran hope to combine their operations within 24 months of the closing deal, according to Southwest chief Gary Kelly.

But if this new merger is really as good as it sounds- better service, more flights around the world at no increased cost- what’s your next vacation destination going to be?

The Daily Update: Monday, Sept. 27

September 27, 2010 by · 2 Comments 

The Daily Update: Monday Sept. 2t from SMUDailyMustang.com on Vimeo.

Join us for today’s Daily Update where we tell you how the SMU campus ranks on the FBI crime list and if Southwest Airlines will be expanding.