Southwest CEO on mergers: 'Never say never'

AP News
Posted: Dec 17, 2009 2:17 PM

The CEO of Southwest Airlines Co. said Thursday the discount carrier would never rule out the idea of acquiring another carrier in order to grow.

But Gary Kelly told a Wings Club gathering in New York that it is important to Southwest to maintain its point-to-point business model and its ability to manage its fleet, which helps keep costs low.

"I would never say never, and you know I won't give you a straight answer on that," he said during a question-and-answer session after his speech, which was broadcast on the Internet.

Kelly said Southwest, based in Dallas, will be on the prowl for any opportunities that help it grow.

Earlier this year, Southwest made a bid to buy Frontier Airlines out of bankruptcy but withdrew when it could not get an agreement with union pilots over merging the Southwest and Frontier crews.

Frontier was bought instead by Republic Airways Holdings Inc.

On Tuesday, Delta Air Lines Inc. CEO Richard Anderson told investors at a conference that a case could be made for further consolidation in the U.S. airline industry, but it's unclear whether the Obama administration would allow it.

Anderson didn't hint whether the world's biggest airline, which bought Northwest Airlines last year, has the appetite for another acquisition. But he suggested there is room for more mergers in the industry.

Some analysts have speculated in the past that Alaska Air Group Inc. or JetBlue Airways Corp. could be appealing targets for Delta. There also has been talk in recent years of possible combinations between Continental Airlines Inc. and United Airlines and between American Airlines and US Airways Group Inc.

But no merger deals involving major carriers have materialized since Delta bought Northwest.

Kelly said that Southwest's current plans are for its capacity, as measured by available seats times miles flown, to be roughly flat in 2010 compared to this year.

He said he believes the economy will continue to grow modestly in 2010, but Southwest plans to be conservative.