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Flying together

Money | Texas-based Southwest Airlines, the nation's largest low-cost carrier, announced a friendly takeover of Florida-based AirTran Airways

Issue: "2010 Election: The Governors," Oct. 23, 2010

Texas-based Southwest Airlines, the nation's largest low-cost carrier, announced a friendly takeover of Florida-based AirTran Airways-a $1.4 billion cash-and-stock deal. The merger, the latest in a series of air-carrier consolidations, will put Southwest into more direct competition with larger companies, especially Atlanta-based Delta Airlines. Like Delta, AirTran has its main hub at Atlanta's Hartsfield-Jackson, the world's busiest airport.

"Southwest is following the trend in the industry: merge or acquire in order to stay alive and competitive," Brett R. Gordon, a marketing professor at Columbia Business School, told The New York Times. The Southwest/AirTran deal follows a 2008 merger of Delta and Northwest and a just-completed deal between United and Continental.

Joseph Slife is the assistant editor of

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Less shock and awe

Noting that "the pace of recovery in output and employment has slowed in recent months," the Federal Reserve's policy-making Open Market Committee opted to leave interest rates at rock-bottom levels. And the committee said it was "prepared to provide additional accommodation if needed to support the economic recovery."

Although the exact nature of that "additional accommodation" was left undefined, The Wall Street Journal reported Fed officials are considering an approach that differs from the central bank's earlier "shock and awe" purchase of mortgage bonds and Treasury securities. "Fed officials are weighing a more open-ended, smaller-scale program that they could adjust as the recovery unfolds," the paper reported. "Under the alternative approach gaining favor inside the Fed, it would announce purchases of a much smaller amount for some brief period and leave open the question of whether it would do more, a decision that would turn on how the economy is doing."

From late 2008 until March 2010, the Fed bought an unprecedented $1.7 trillion in mortgage and Treasury debt. Two months ago, rather than reduce its debt holdings as planned, the central bank opted to use proceeds from maturing mortgage bonds to buy even more Treasury obligations.

While central bankers debated a course of action, consumer confidence sagged in September, the result of "less favorable business and labor market conditions, coupled with a more pessimistic short-term outlook," according to Lynn Franco of the Conference Board's Consumer Research Center. "Overall, consumers' confidence in the state of the economy remains quite grim," she noted.

Joseph Slife
Joseph Slife

Joseph is the senior producer of WORLD Radio and the co-host of The World and Everything in It.


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