Southwest-AirTran showdown looms By Trebor Banstetter Star-Telegram Staff Writer AirTran Airways' proposed expansion in Chicago could set the stage for a showdown between the nation's two largest discount carriers _ AirTran and Southwest Airlines. AirTran wants to buy the operations of bankrupt carrier ATA Airlines at Chicago Midway Airport, which would give the airline 14 gates and make it Midway's second-largest carrier, after Southwest. Dallas-based Southwest has 17 gates at Midway, and offers 134 daily nonstop flights to 30 cities. Southwest is the nation's largest low-fare airline, and AirTran holds the No. 2 spot. But the carriers rarely compete head-to-head. AirTran focuses largely on the East Coast and connects traffic through its hub in Atlanta. Southwest, meanwhile, operates mainly city-to-city routes and, until recently, lacked a strong presence in the Northeast. "As AirTran works to build a brand at Chicago Midway, our sense is that the airport's leading carrier, Southwest, is not likely to stand still," said airline analyst Michael Linenberg of Merrill Lynch, in a note to investors Wednesday. "Southwest could easily add 50 flights to its base there." Stan Gadek, AirTran's chief financial officer, acknowledged that the two carriers will bang heads in Chicago. "I think certainly we're going to be competing with Southwest at Midway," he said. "I think we compete very well with Southwest in other markets." But he added that AirTran and Southwest "don't really step on each other's footprint." His airline, he said, focuses primarily on business fliers, while Southwest is geared toward leisure travelers. "It is not our intent to go head-to-head with them," he said. Officials with Southwest said it is too early to guess how the rivalry could shape up. "There are too many 'what if?' scenarios out there," said spokesman Ed Stewart. "We'll have a better idea down the road." Still, he added, "there is no business more competitive than the airline business." AirTran's stock (NYSE: AAI) jumped $1.39 per share, or 14 percent, to close at $11.64 in trading Wednesday. Shares in Southwest (NYSE: LUV) rose 34 cents, or 2 percent, to close at $15.24 per share. AirTran faces some hurdles before its ascent in Chicago. According to ATA, several other airlines have expressed interest in bidding on the carrier's assets, including America West. And some analysts doubt that AirTran can make money at Midway, when ATA couldn't. "ATA's Midway operations have been consistently unprofitable," said airline analyst Jamie Baker of J.P. Morgan Securities in a report to investors. "With largely similar costs, it's unclear how AirTran's operations will be any different." In a conference call with analysts Wednesday, AirTran executives predicted that the Chicago operation would break even next year and become profitable in 2006. Orlando-based AirTran reported a third-quarter loss of $10 million, down from last year's profit of $20 million for the same period. Executives blamed high fuel prices and the hurricanes in Florida for the poor results. Roger EWROPS