U.S. likely to clear Southwest/Airtran deal

WASHINGTON (BestGrowthStock) – U.S. antitrust enforcers are unlikely to object to a proposal by Southwest Airlines Co (LUV.N: ) to purchase Air Tran Holdings Inc (AAI.N: ), an antitrust research and advocacy group said on Tuesday.

The American Antitrust Institute said, however, that the deal could change the business model of low cost airlines as well as pricing strategies that have made them tough competitors.

“Based on what we can gather from the (Justice Department’s) public statements in other recent airline mergers, the combination of Southwest/AirTran probably wouldn’t meet with antitrust enforcement resistance,” said Diana Moss, the AAI’s vice president.

Southwest said in September it would buy AirTran for about $1 billion in a move expected to challenge bigger rivals in lucrative East Coast business hubs.

Southwest shares were up 11 cents, or nearly 1 percent, to $12.95 on the New York exchange. AirTran shares were unchanged at $7.41.

The Justice Department this year already approved the merger of United Airlines and Continental Airlines, which now operate as United Continental Holdings (UAL.N: ).

Delta Air Lines (DAL.N: ) bought Northwest in 2008 to start the latest wave of mergers, which airlines and industry experts said was necessary to cut capacity and improve profits.

North American airlines are expected to make $5.1 billion this year, compared to a $2.7 billion loss last year and a $9.6 billion loss in 2008, according to projections on Tuesday by the International Air Transport Association (IATA).

(Reporting by John Crawley; Editing by Derek Caney)

U.S. likely to clear Southwest/Airtran deal