Southwest Airlines, the nation�s largest low-fare carrier, said on Monday that it had agreed to buy its smaller rival AirTran Airways in a transaction valued at $1.4 billion, expanding its foothold in New York and Boston and allowing it to move into the nation�s largest airport, Atlanta�s Hartsfield-Jackson.

Southwest said the purchase had been approved by the boards of both companies, although it still needs regulatory and shareholder approval. The deal is valued at $3.4 billion when AirTran�s debt and aircraft leases are included.

The acquisition is only the third for Southwest in three decades and its most ambitious to date, said the company�s chairman and chief executive, Gary C. Kelly. �It is a huge piece of our strategy to grow Southwest over the next decade,� he said Monday during a news conference.

The deal would expand Southwest�s network by 25 percent, and increase its revenue by about 20 percent, or $2 billion, Mr. Kelly said. Each airline serves about 70 airports, overlapping on 19 routes. Southwest has 547 planes while AirTran has 138.

(Read More: NY Times)