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Southwest Buys Some of ATA’s Midway Assets

Southwest won the bidding battle over ATA’s assets at Midway.  Southwest will pay $40 million for 6 gates at Midway, provide $40 million in financing, and take a 27.5% stake in ATA.  The airlines also agree to codeshare on as-yet-undetermined routes.  ATA’s founder and CEO also will step down in the deal.

This agreement gives Southwest an even greater foothold into Midway, which isn’t a bad thing for consumers (if you’re going to have one airline with a huge presence, it might as well be one with reasonable fares).  Plus, through the codeshare, Southwest may gain a presence at major airports such as Boston and LaGuardia (good news for consumers in those markets).  I also think this is a good thing for AirTran, which had been bidding on these assets.  Assuming these gates (and the gates at DCA and LGA they had bid on) would’ve been an expensive and difficult task, and run counter to its successful strategy of slow growth.  While they’re probably disappointed now, I think AirTran will be happy in the long-run.

Also disappointed are Charlotte passengers, who learned that ATA will be pulling out of that market, leaving only Independence Air to provide low fares. 

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