Airtran 2010 Annual Report Download - page 43

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
All of the flight operations of AirTran Holdings, Inc. (the Company, AirTran, or Holdings) are conducted by our wholly-
owned subsidiary, AirTran Airways, Inc. (AirTran Airways or Airways) (collectively we, our, or us). AirTran Airways is
one of the largest low cost scheduled airlines in the United States in terms of departures and seats offered. We operate
scheduled airline service throughout the United States and to selected international locations. Approximately half of our
flights originate or terminate at our largest hub in Atlanta, Georgia and we serve a number of markets with non-stop
service from our hubs in Baltimore, Maryland; Milwaukee, Wisconsin; and Orlando, Florida. As of January 31, 2011, we
operated 86 Boeing B717-200 aircraft (B717) and 52 Boeing B737-700 aircraft (B737) offering approximately 700
scheduled flights per day to 69 locations across the United States and the Caribbean, including San Juan, Puerto Rico;
Cancun, Mexico; Montego Bay, Jamaica; Nassau, The Bahamas; and Orangestad, Aruba. The traditional elements of our
success include: competitive fares; superior service; an attractive network; product value; low unit costs; adaptability;
flexibility; innovation; and the enthusiasm and skills of our employees.
Recent Development – Proposed Acquisition of AirTran by Southwest Airlines
On September 26, 2010, AirTran, Southwest Airlines Co., a Texas corporation (Southwest), and a wholly-owned
subsidiary of Southwest (the Southwest merger subsidiary) entered into an Agreement and Plan of Merger (the Merger
Agreement), providing for the acquisition of AirTran by Southwest. The Merger Agreement provides that, upon the terms
and subject to the conditions set forth in the Merger Agreement, the Southwest merger subsidiary will be merged with and
into AirTran (the Merger), with AirTran continuing as the surviving corporation and as a wholly-owned subsidiary of
Southwest. Following the effective time of the Merger, AirTran will merge with and into a wholly-owned limited liability
company subsidiary of Southwest.
Subject to the terms and conditions of the Merger Agreement, if the Merger is completed, each outstanding share of
AirTran common stock (including previously unvested restricted shares of AirTran common stock) will be converted into
the right to receive (i) $3.75 in cash (the Per Share Cash Consideration), and (ii) the number of shares of Southwest
common stock equal to the Exchange Ratio (as defined below) (the Per Share Stock Consideration). The Per Share Cash
Consideration and the Per Share Stock Consideration are collectively referred to herein as the Merger Consideration.
The Exchange Ratio will be determined as follows:
(i) In the event that the average of the last reported sales prices for a single share of Southwest common stock on the
New York Stock Exchange (the NYSE) for the 20 consecutive full trading days ending on (and including) the third
trading day prior to the closing date of the Merger (the Southwest Average Share Price) is less than $10.90, the
Exchange Ratio will equal (A) $3.50 divided by (B) the Southwest Average Share Price, rounded to the nearest
thousandth.
(ii) In the event that the Southwest Average Share Price is equal to or greater than $10.90 but less than or equal to
$12.46, the Exchange Ratio will be 0.321.
(iii) In the event that the Southwest Average Share Price is greater than $12.46, the Exchange Ratio will equal
(A) $4.00 divided by (B) the Southwest Average Share Price, rounded to the nearest thousandth.
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