Southwest Airlines (NYSE: LUV) is going shopping, and the move is said by some to be potentially transformational for the carrier and the airline exchange traded fund (ETF).
Discount carrier Southwest has announced plans to buy its low-fare rival AirTran (NYSE: AAI) for $1.4 billion. Doug Cameron and Tess Stynes for The Wall Street Journal report that the deal will take Southwest into new areas, including Atlanta, as well as smaller cities and international destinations. [Airline ETF Finds Friendly Skies.]
The deal is the first between any major low-cost carriers in the United States. The finalization of the process could take about two years and it also still needs to be approved by both shareholders and competition authorities. [4 Bullish Signs For Transportation ETFs.]
- Claymore/NYSE Arca Airline (NYSEArca: FAA): Southwest is 15%; Airtran is 3.3%
Tisha Guerrero contributed to this article.