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Behind the Scenes at the Southwest/AirTran Deal

What do cowboys and falcons have in common? Football fans will recognize them as two of the NFL’s 32 franchises, from Dallas and Atlanta, respectively. But they’re also the code names used during acquisition talks between Southwest and AirTran: Southwest, which is based in Dallas, was codenamed “Cowboy,” while AirTran was “Falcon,” in homage to its hub in Atlanta.

Sounds like the big shots running this thing had a little fun with it, huh?

But according to Bloomberg, which published a behind-the-scenes look at the merger, it wasn’t all jokes and games. In fact, the merger started with an impromptu meeting arranged by Southwest CEO Gary Kelly—a meeting he feared might blow up in his face. Kelly tells Bloomberg, “I just picked up the phone and called [AirTran CEO Bob Fornaro]. I was purposely vague. I said, ‘Do you want to sit down and explore what we can do together?’ It wasn’t until we actually met in person a couple of weeks later that I laid out what I wanted to talk about. I didn’t know if he’d get up and leave or not.”

Initially, Fornaro said the airline wasn’t for sale—but AirTran was nevertheless “willing to entertain an offer from Southwest,” according to Kelly.

The rest, as we now know, is history.

In a similar piece by the Atlanta Journal-Constitution, which has closely monitored the acquisitions effects on AirTran and Atlanta, Fornaro says there was “no other bidder.” Fornaro tells Bloomberg that only seven or eight AirTran executives even knew the deal was in the works.

Unsurprisingly, then, the surprise factor—few in the industry suspected a Southwest-AirTran deal—was by design. “Secrecy and avoiding leaks was absolutely paramount,” Fornaro tells Bloomberg.

Ultimately, Fornaro said the deal went forward because it made sense for AirTran. “You’ve got to put yourself in the situation where you can win,” he tells the AJC. “That was the motivation from my perspective. The company would be in a better position and 8,000 [employees] would get the benefit of that.

Fornaro continued, “Any potential deal had to be friendly. It was very important because the cultural fit had to be there. And quite frankly it had to be a deal that took care and created opportunities for both employee groups.”

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