Delta Cuts Memphis Flights



Listen up Memphis travelers...we have good news and bad news. The bad news is Delta has cut Memphis flights. And the good news is Southwest airlines may very well merge with Airtran.

The Commercial Appeal reports Southwest Airlines buyout of AirTran, potential balm to Memphis International Airport's losses to a Delta Air Lines downsizing, moved a step closer to reality Wednesday.

AirTran shareholders approved a proposed $1.4 billion sale to Southwest Airlines, leaving federal antitrust clearance as the last hurdle. Southwest and AirTran want to close the deal in the second quarter and merge operations over time.

AirTran, with four flights daily from Memphis to Atlanta, would have sole occupancy of Terminal A once Delta completes a 25-percent departure reduction and consolidates gates into Terminal B at Memphis.

The potential to bring in Southwest and inject more competition into the Memphis fare structure wasn't lost on airport, business and tourism officials. Delta said Tuesday it would eliminate 8-10 percent of its seat capacity on flights departing Memphis, primarily by cutting out unprofitable routes to small regional markets.

Greater Memphis Chamber president John Moore said Memphis officials must be diplomatic in efforts to shop the airport to new customers.

"If we blast out there, 'There's an all out effort to go after Southwest,' that won't help us with either Southwest or Delta," Moore said. "One of the things I feel like we need to be cautious about is any efforts under way, we don't want to undercut those efforts."

Airport Authority president and CEO Larry Cox said Southwest expansion of AirTran's Memphis service makes sense.

"Obviously, if I was Southwest and I was seeing Delta reduce their size here, it gives them an opportunity. Certainly there are facilities at the airport for them to immediately not only continue the Atlanta service but to select other markets in the United States," Cox said.

"We don't know what their plans are," he added. "They're not telling anybody. For one, the federal government has not approved their merger yet."

Memphis Convention & Visitors Bureau president Kevin Kane said officials recognize the opportunity with Southwest. "We're not brain dead. We all have neighbors and friends who talk about having to drive to Little Rock or Nashville because you can get so much better air fare when you take the wife and three kids to Los Angeles or New York or something. We're not asleep at the switch."

AirTran said more than 98.6 percent of votes cast and 77.5 percent of outstanding shares were in favor of the deal.

AirTran chief executive Bob Fornaro, in a written statement, said stockholders recognized the value of bringing together AirTran and Southwest for “increased profitability and sustainable long-term value.”

AirTran’s board of directors had unanimously recommended approval. The deal is not subject to approval by Southwest shareholders.

The buyout would give AirTran shareholders $3.75 in cash and 0.321 shares of Southwest common stock, and values AirTran stock at $7.25 to $7.75, depending

on the Southwest stock price, a substantial premium over AirTran’s price when the deal was struck last September.

Former AirTran shareholders would own about 6 percent of Southwest after the deal, according to the companies.

Southwest’s entry into Atlanta, where AirTran has its main hub, means a bigger primary competitor for Delta Air Lines. It also furthers consolidation in the airline industry, which has seen mergers between Delta and Northwest; United and Continental; and US Airways and America West in recent years.

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