WORLD ROUTES: Southwest Eyes Scraps from Possible American – US Airways Merger

US low-cost carrier, Southwest Airlines is neither “for or against” the planned American Airlines - US Airways merger, but is looking for “meaningful divestiture of slots” at some US gateways, its executive vice president and chief commercial officer said during the Strategy Summit at World Routes in Las Vegas.

Bob Jordan admitted that the scope of the Department of Justice’s lawsuit “was a surprise to me” and added Southwest was looking for a more level playing field at key airports before the merger goes ahead. “We have no problem with competing, we have done so for many years, but you can’t compete if you don’t have access. It is very difficult it you can’t get slots at Washington Reagan National, New York LaGuardia and Newark Liberty International,” he said. “What I am for is meaningful divestiture of slots and fair process to give Southwest fair access to DC.”

The Southwest and Air Tran Airways boss added that the United Airlines and Continental Airlines merger saw United approach Southwest about the sale of slots at Newark ahead of that deal. “We agreed the sale within weeks and that sorted out what would have been a stumbling block for that merger,” he said.

Speaking on a session focused on mergers, Jordan said the culture and employees at AirTran was a good fit for Southwest, which made that merger much easier. He added that the financial landscape in 2010 made the deal an attractive one for shareholders at that time.

“The culture at Southwest and AirTran helped us work through the deal quickly. We had a single operator certificate in nine months. AirTran is a fantastic company but it had struggled financially – we took costs out within weeks – things like insurance, debt – we renegotiated contracts…we moved quickly because of the favourable terms Southwest has.”

Jordan said about $100 million “fell out very quickly with treasury related things”. Other synergies though were tougher to pick up. “AirTran has a hub model so we maintain viable hub and Southwest O&D model too. We had a codeshare in place earlier this year which was very helpful. Now we have 37 cities that have overlapping capacity such as Baltimore and Milwaukee,” he added.