Southwest Airlines to Merge with AirTran

As you have probably learned already, Southwest Airlines is set to acquire AirTran for $1.4 billion. On September 27, Southwest Airlines announced the friendly take-over. Interesting is the fact that, for the first time, Southwest will then offer flights to destinations outside of the U.S. (continuing AirTran service to Mexico and the Caribbean).

The deal is in general an interesting move by Southwest, which has shied away from acquisitions for most of its 39-year history. The timing is also well chosen - since Continental's and United's stakeholders just approved their merger a few weeks ago. But why did Southwest consider the merger in the first place? Well, the two airlines competed at around 30 airports and the merger will give Southwest more access to important markets, such as New York, Orlando and Boston. It also gives Southwest more slots at Atlanta, Delta's main hub.

The fact that AirTran owns Boeing 717s as well as 737s will be a huge disadvantage and I would bet my money that Southwest will get rid of AirTran's 717 shortly. One of the key strategies of Southwest is owning only one aircraft type - the 737. This means that all pilots can fly all planes, all parts are the same for all planes and training for crew members is really simple. If they suddenly have two different planes, the costs will go up.

All in all, I think the merger will be good for the U.S. airline industry, but bad for most customers, since I predict that ticket prices will go up...

To read the Wall Street Journal Article, please click here.

WSJ: Continental and United to Merge

It looks like there will be another mega airline merger coming up soon. According to a Wall Street Journal piece, Continental Airlines and United Airlines have pretty much finalized their merger talks and will be announcing the deal on Monday. According to reports, the two airlines will operate under the United name and will be headquartered in Chicago, United's current base. Continental's CEO Jeff Smisek will become CEO of the combination.

To read the Wall Street Journal story, please click here.

WSJ - Embraer: Plane Speaking

The last one and a half years haven't been too positive for Brazil's Empresa Brasileira de Aeronáutica SA (Embraer). Orders have declined and the company had to lay off 20% of its workforce. But which aviation company can claim that the time since 2007 has been a good one? So compared to other businesses, Embraer has done pretty well during the economic crisis. Now, the bosses of South America's largest plane manufacturer are at a crossroads: Where to go from here? Should Embraer continue to focus on small jet planes? Or should it enter the market for larger, maybe even long-haul aircraft and try to compete with Airbus and Boeing, the two dominant (actually: ONLY) players in the market?

Click here to read the Wall Street Journal piece.

WSJ - EU Makes Push for Real-Time Flight Data

In the wake of the AF 447 crash last June more and more pilots, aviation experts and policy makers support the introduction of real-time flight data streaming. The International Civil Aviation Organization's global aviation summit will start tomorrow in Montreal, Canada, and the EU's transport commissioner, Siim Kallaswill, will officially endorse such a program. This will mark the first official government endorsement of such data streaming.

To read the Wall Street Journal Article, please click here.