SOUTHWEST Airlines announced yesterday that it will buy low-fare carrier AirTran for about US$1.42 billion. The move will put Southwest in head-to-head competition with Delta Air Lines in Delta's home base of Atlanta.

The buyout, which mainly includes AirTran's debt, will also give Southwest a bigger slice of the market in cities such as Boston and New York, where it has been expanding.

Southwest, based in Dallas, carries more passengers than any other airline in the United States. Besides its base in Atlanta, AirTran has hubs in Milwaukee and Orlando.

The announcement continues the airline industry's move to consolidate. Continental Airlines and United Airlines parent UAL Corp will formally combine at the end of this week and become the world's largest, toppling Delta.

Delta claimed that spot when it acquired Northwest Airlines two years ago.

Southwest's acquisition of AirTran is expected to close in the first half of next year and the airlines are forecast to fully merge their operations in 2012.

Southwest will pay about US$670 million with available cash and assume US$2 billion in AirTran debt.

Southwest and AirTran said the new airline will operate from more than 100 different airports and serve more than 100 million customers.

In April, AirTran CEO Roberto Fornaro signaled his interest in a combination with another carrier.