ValuJet to drop name in merger with AirTran

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Associated Press ATLANTA _ ValuJet Airlines, whose public image has suffered since a May 1996 crash in the Florida Everglades, is buying AirTran Airways and plans to drop the ValuJet name. The deal, announced today, will be accomplished though a stock swap valued at $61.8 million. The combination of ValuJet and AirWays Corp., AirTran's parent company, would have 2,742 employees and serve 46 cities with 40 aircraft and 238 peak daily departures. A location for the headquarters of AirTran Holdings Inc., as the new company will be called, has not been decided, but Orlando, Fla., is the leading candidate. AirWays Corp. is based there. The merger is expected to be completed within four months. ValuJet has been losing money ever since the May 11, 1996, crash of Flight 592, which killed all 110 people on board. The airline became the subject of an intense safety review after the crash, and was grounded by the Federal Aviation Administration for more than three months. ``The merged company will benefit from access to AirWays' maintenance facility in Orlando and the ValuJet launch order for 50 firm and 50 option McDonnell Douglas MD-95s,'' ValuJet president and chief executive D. Joseph Corr said. He will serve as president and CEO of the new company. Robert D. Swenson, AirWays chairman and president, will serve as non-executive chairman of the combined company. ValuJet will nominate four members to the new company's board of directors. AirWays will name three. ``This merger should significantly enhance AirTran's growth prospects with the strong cash position of the merged companies and our combined operating fleet total of more than 40 aircraft,'' Swenson said. AirTran serves 23 mid-size cities from Orlando. It will have 11 Boeing 737 aircraft by the end of July. Atlanta-based ValuJet serves 24 cities from Atlanta with a fleet of 30 aircraft. Terms of the deal call for ValuJet to pay one share of its stock for each AirWays share. Based on Wednesday's closing stock price, that comes to $61.8 million. The merger is subject to approvals from shareholder, bondholders, regulators and others.

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