AirTran Airways and Southwest Airlines. Courtesy, SWA

FAA has granted Southwest Airlines (SWA) and AirTran Airways a single operating certificate, formally combining the world's largest low-cost carrier (LCC) with the third largest LCC in North America.

Dallas-based SWA acquired Orlando-based AirTran last year in a deal valued at around $1 billion in aggregate (below the $1.4 billion originally estimated), or approximately $7.57 per share of AirTran common stock (ATW Daily News, May 3, 2011). Including SWA's assumption of AirTran's debt, the transaction was valued at $3.2 billion. SWA estimates net annual synergies will exceed $400 million by 2013.

"We cannot overstate the significance of having received our single operating certificate—it is a monumental step in the regulatory process—and achieving it enables us to move forward with the integration of the two airlines into a single carrier," SWA COO Mike Van de Ven said.

The carrier cautioned in a statement that "the transition to a single ticketing system is a large and complex process that will take several years to complete." Van de Ven said that "most employees and customers will see little or no immediate difference in the two airlines' flight operations." SWA has ruled out capacity growth this year.