Southwest Airlines 2010 Annual Report Download - page 28

• Outbreaks of disease;
• Changes in consumer preferences, perceptions, spending patterns, or demographic trends;
• Actual or potential disruptions in the air traffic control system;
• Changes in the competitive environment due to industry consolidation, industry bankruptcies, and other
factors;
• Air traffic congestion and other air traffic control issues; and
• Actual or threatened war, terrorist attacks, and political instability.
The airline industry is intensely competitive.
As discussed in more detail above under “Business — Competition,” the airline industry is intensely
competitive. The Company’s competitors include other major domestic airlines, as well as regional and new
entrant airlines, surface transportation, and alternatives to transportation such as videoconferencing and the
Internet. The Company’s revenues are sensitive to the actions of other carriers with respect to capacity, pricing,
routes, scheduling, Customer Service, cost structure, and codesharing and similar activities.
Risk Factors Related to the Company’s Proposed Acquisition of AirTran
On September 26, 2010, the Company entered into a merger agreement providing for the Company’s
acquisition of AirTran. Set forth below are risk factors related to the merger.
The merger is subject to the receipt of consents and clearances from regulatory authorities that may impose
conditions that could have an adverse effect on the Company or that could delay or, if not obtained, could
prevent completion of the merger.
Before the merger may be completed, applicable waiting periods must expire or terminate under antitrust
laws and various approvals, consents or clearances may be required to be obtained from regulatory entities. In
deciding whether to grant antitrust or regulatory clearances, the relevant governmental entities will consider the
effect of the merger on competition within their relevant jurisdictions. The terms and conditions of the approvals
that are granted may impose requirements, limitations or costs or place restrictions on the conduct of the
Company’s business following the merger. There can be no assurance that regulators will not impose conditions,
terms, obligations or restrictions and that such conditions, terms, obligations or restrictions will not have the
effect of delaying completion of the merger or imposing additional material costs on or materially limiting the
revenues of the Company following the merger. In addition, there can be no assurance that any such conditions,
terms, obligations or restrictions will not result in the delay or abandonment of the merger.
Any delay in completing the merger may reduce or eliminate the benefits expected to be achieved
thereunder.
In addition to the required regulatory clearances and approval by AirTran’s stockholders, the merger is
subject to a number of other conditions beyond the Company’s and AirTran’s control that may prevent, delay or
otherwise materially adversely affect its completion. The Company cannot predict whether and when these other
conditions will be satisfied. Furthermore, the requirements for obtaining the required clearances and approvals
could delay the completion of the merger for a significant period of time or prevent it from occurring. Any delay
in completing the merger could cause the Company not to realize some or all of the synergies and other benefits
that it expects to achieve if the merger is successfully completed within its expected time frame.
Uncertainties associated with the merger may cause a loss of management personnel and other key
employees of AirTran which could adversely affect the future business and operations of the Company
following the merger.
The Company and AirTran are dependent on the experience and industry knowledge of their officers and
other key employees to execute their business plans. The Company’s success after the merger will depend in part
22