Southwest Airlines 2011 Annual Report Download - page 42

As of December 31, 2011, Southwest operated six Customer Support and Services centers. The centers
located in Chicago, Albuquerque, and Oklahoma City occupy leased space. The Company owns its Houston,
Phoenix, and San Antonio centers. AirTran leases office space in Atlanta for use as a reservations center, a
reservations center in Savannah, Georgia, a warehouse and engine repair facility in Atlanta, and a reservations
center in Carrollton, Georgia.
The Company performs substantially all line maintenance on its aircraft and provides ground support
services at most of the airports it serves. However, the Company has arrangements with certain aircraft
maintenance firms for major component inspections and repairs for its airframes and engines, which comprise the
majority of the Company’s annual aircraft maintenance costs.
Item 3. Legal Proceedings
From September 28, 2010 to January 18, 2011, various purported class action lawsuits were filed by
stockholders of AirTran Holdings, Inc. that challenged the acquisition of AirTran by the Company. While the
Company believes that each of these lawsuits was without merit, all but two were settled and dismissed during
the third quarter of 2011, which resolved and released on behalf of the entire class of former AirTran
stockholders all claims that were or could have been brought challenging any aspect of the merger, the merger
agreement, and any disclosure made in connection therewith, among other claims. An additional action was
dismissed during the fourth quarter of 2011, and one action remains pending. These two actions are discussed
below.
The one remaining action is a consolidation of four purported AirTran shareholder class action lawsuits
that were filed in the Circuit Court of the Ninth Judicial Circuit in and for Orange County, Florida. Harry Hoffner
filed a purported class action lawsuit on September 30, 2010 against AirTran, Robert L. Fornaro, AirTran’s
Chairman, President, and Chief Executive Officer, each member of the AirTran board of directors, and the
Company. This was followed by lawsuits filed by Robert Debardelan on October 8, 2010, Thomas A.
Rosenberger on October 12, 2010, and Robert Loretitsch on October 15, 2010, against the same defendants plus
Guadalupe Holdings Corp. (“Merger Sub”). On November 15, 2010, these actions were consolidated into one
action styled In re AirTran Shareholder Litigation (the “consolidated Florida action”), which on December 2,
2010, was stayed in its entirety pending resolution of the earlier filed merger-related lawsuits. The consolidated
Florida action generally alleges that the consideration received by AirTran’s stockholders in the merger was
unfair and inadequate and that the AirTran officers and directors named as defendants (the “individual AirTran
defendants”) breached their fiduciary duties by approving the merger agreement through an unfair and flawed
process and by approving certain deal protection mechanisms contained in the merger agreement. The
consolidated Florida action further alleges that AirTran, the Company, and Merger Sub aided and abetted the
individual AirTran defendants in the breach of their fiduciary duties to AirTran’s stockholders. The consolidated
Florida action sought injunctive relief to (i) enjoin the defendants from consummating the merger unless AirTran
adopted and implemented a procedure or process to obtain the highest possible price for AirTran’s stockholders
and disclosed all material information to AirTran’s stockholders, (ii) direct the individual AirTran defendants to
exercise their fiduciary duties to obtain a transaction in the best interests of AirTran’s stockholders, and
(iii) rescind the merger agreement, including the deal protection devices that may have precluded premium
competing bids for AirTran. The consolidated Florida action also seeks plaintiffs’ costs and disbursements,
including reasonable attorneys’ and experts’ fees, and such other and further equitable relief as the court may
deem just and proper. As a result of the settlement and dismissal of the other merger-related lawsuits, as
discussed above, the defendants in the consolidated Florida action are currently in the process of seeking
dismissal of that action. The plaintiffs in the consolidated Florida action have filed a motion seeking an award of
attorneys’ fees in the amount of $350,000, which the defendants have opposed. No hearing is currently set.
On January 18, 2011, William Nesbit filed a purported AirTran shareholder class action lawsuit in the
United States District Court for the District of Nevada against the same defendants as in the consolidated Florida
action. The allegations and claims set forth in the Nesbit lawsuit, as well as the relief requested, were generally
the same as those set forth in the consolidated Florida action. The Nesbit lawsuit additionally alleged, as part of
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