Another bid to buy Midwest Airlines?

[Ty Webb]

At least try to be realistic before starting rumors.

Why start now?



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[TWA Dude]

I heard it was US Airways. They are not confident in the Delta deal and are looking for a decent midwest hub.

If only wishes would come true!

 

[NuGuy]

Think before you start rumors...
No one can just buy the company. The board has to approve the sale. There is a poison pill in place for whomever tries to acquire too much stock. I don't see what Midwest would bring to NWA or why they would want Midwest. NWA already has plenty of gates in MKE, they've already tried to go to several cities from MKE and it hasn't worked for them. There aren't enough 717's to replace NWA's 9's and the 80's don't fit in anywhere. NWA is in MSP and Detroit why would they want to spend so much cash to get a stronger presence in MKE? What would NWA benefit, other than getting market share in MKE, but for $300 plus million dollars would it be worth it to them? Definately not. At least try to be realistic before starting rumors.

It's called denial of territory. NWA is happy with Midwest they way they are. They know that, at least in the short term, they aren't much of a threat. OTOH, they've learned from DALs mistake to keep the faster growing weeds in check, lest they take over the garden. NWA is very well known in protecting their territory AND spoiling everyone else's fun, so I wouldn't put this past them at all.

Besides, NWA's goal does NOT have to be the purchase of Midwest, only to run the price up. If the shareholders of Midwest consider AirTran's offer, they have a fiduciary duty to consider any higher offers.

Nu

 

[Citrusflyer]

Midwest acquisition is still up in the air
AirTran may want negotiations under way before sweetening its offer, analysts say
By TOM DAYKIN
[email protected]
Posted: Jan. 4, 2007
AirTran Holdings Inc.'s attempted acquisition of Midwest Air Group Inc. remains stuck in a holding pattern, with AirTran unlikely to sweeten its buyout offer unless it can persuade Midwest to enter into negotiations.
That's the view of industry analysts contacted this week, following a lull over the Christmas and New Year's holidays.
The last significant news in AirTran's takeover campaign came just before Christmas, when Oak Creek-based Midwest Air, owner of Midwest Airlines, hired investment banker Goldman Sachs to provide strategic advice.
AirTran Holdings, owner of AirTran Airways, isn't expected to immediately boost its offer of $11.25 a share, said Helane Becker, an analyst with New York-based Benchmark Co.
Becker and other analysts said they didn't expect other airlines to bid on Midwest.
AirTran is the most likely buyer for Midwest, they said, because both airlines rely heavily on the same aircraft and have little overlap on the routes they fly.
So, raising the offer would amount to AirTran bidding against itself, Becker said.
Midwest Air Chairman Timothy Hoeksema has said AirTran's offer of $290 million is too low, but that Midwest's board would carefully evaluate any new, credible offer.
AirTran Chairman Joe Leonard has said his company would be willing to pay more if Midwest would agree to provide proprietary financial information to show any additional value.
That proprietary information would include details on the profitability of individual Midwest routes, said Brian Nelson, an analyst with Morningstar Inc., a Chicago provider of independent investment research.
Otherwise, AirTran "wouldn't have a basis to hike its offer," he said.
Nelson said he believes a sale of Midwest to AirTran will happen eventually. Midwest stock, which closed down 9 cents Thursday at $11.57 a share, has generally been trading above $11.25 since Midwest announced its hiring of Goldman Sachs.
That suggests that investors believe the company will be sold to AirTran at a price higher than the original offer, Nelson said.
"This deal looks like it's going to get done, one way or another," Nelson said.
AirTran's strategy of going public with Midwest's rejection of its purchase offer has not generated enough shareholder pressure to force Midwest to negotiate with AirTran, said Craig Kennison, an analyst with Milwaukee-based Robert W. Baird & Co.
AirTran would need to sweeten its offer to get Midwest to open its books, Kennison said. Even if that happens, though, he doubts AirTran would discover much additional value.
"The discussion of opening its books is simply an element of the negotiation process," Kennison said.
"It's like selling a home. Once you start talking about who keeps the appliances, the buyer knows he has a deal. If the parties are too far apart, it doesn't make sense to talk appliances."
AirTran continued its public campaign this week. The Orlando, Fla.-based airline bought another full-page advertisement in the Journal Sentinel to press its case that the merger would be good for shareholders, employees and customers of both AirTran and Midwest.
Also, AirTran is sending letters from Leonard to the CEOs of several major Milwaukee-area companies touting the benefits of the merger, company spokesman Tad Hutcheson said.
Leonard says AirTran would guarantee jobs for virtually all Midwest employees, with the exception of top executives.
He also says AirTran would add flights from Mitchell International Airport, and bring lower fares for passengers flying from Milwaukee.
Hoeksema is dubious of those claims, questioning whether Milwaukee can sustain a major expansion.
He says Midwest's growth plan, which includes a regional jet service that launches in April, provides Midwest with a "significantly higher" value than the AirTran offer.
AirTran also generated headlines when it disclosed in a securities filing late Wednesday that it expects a "modest loss" in the fourth quarter, while reporting a profitable 2006. AirTran's stock closed Thursday at $11.89, down 17 cents.
Meanwhile, Goldman Sachs is working up a detailed study of Midwest, including an updated valuation of the airline and strategic options to help Midwest maximize shareholder value, said Carol Skornicka, Midwest senior vice president of corporate affairs. It's too early to say what might happen once that process is completed, she said.
"I think everybody recognizes something is going to happen," Skornicka said. "We just don't know what."​

 

[FlyWolf]

Meanwhile, Goldman Sachs is working up a detailed study of Midwest, including an updated valuation of the airline and strategic options to help Midwest maximize shareholder value, said Carol Skornicka, Midwest senior vice president of corporate affairs. It's too early to say what might happen once that process is completed, she said.

"I think everybody recognizes something is going to happen," Skornicka said. "We just don't know what."​

Midwest must be thinking seriously about the deal then, never thought that Skornicka would say that otherwise.

I know that our MEC is heading to Atlanta on the 9th of January to meet with the Airtran pilot union leaders, the meeting was described to me as relationship building between the two unions.

Lets hope for the best.

 

[Newpilot2b]

Skw???

 

[bestpilot]

Midwest must be thinking seriously about the deal then, never thought that Skornicka would say that otherwise.

I know that our MEC is heading to Atlanta on the 9th of January to meet with the Airtran pilot union leaders, the meeting was described to me as relationship building between the two unions.

Lets hope for the best.

You Middies are like waayyyy cool. Bringz somma dat Ole Milwaukkee to da Tranny land!!! Iz ole Chuckie cummin wit you and stuff?

Aww Yeaahhhhhhh!!!!!

 

[jimcav]

You Middies are like waayyyy cool. Bringz somma dat Ole Milwaukkee to da Tranny land!!! Iz ole Chuckie cummin wit you and stuff?

Aww Yeaahhhhhhh!!!!!

Screw the Old Mil how about some Miller Lite.

 

[FlyWolf]

You Middies are like waayyyy cool. Bringz somma dat Ole Milwaukkee to da Tranny land!!! Iz ole Chuckie cummin wit you and stuff?

Aww Yeaahhhhhhh!!!!!

LOL, hehe, no chuckie is in rehab right now, he won't be able to make it

 

[fam62c]

I wonder if AirTran is having second thoughts about this deal. I actually think that they believed 11.25 would do it and maybe they still think that. How much more are they willing to (or can they afford to ) pay? It looks like things may be starting to unravel for AirTran anyway, they are starting to lose money and they have a bunch of planes coming that they don't really know what to do with. If the financial community starts to lose faith in Airtran's ability to expand profitably they may be in no position to buy MEH in the near future. If the MEH deal doesn't happen I think you will see Airtran start to slow/cancel growth plans and sell off 737 delivery positions. There's no sense in growing if you can't do it profitably. I still think that the combination makes sense but It will be very tough to get done if the MEH brass won't go willingly and I'm afraid they would take death over Airtran.

 

[FlyWolf]

I still think that the combination makes sense but It will be very tough to get done if the MEH brass won't go willingly and I'm afraid they would take death over Airtran.

fam62c, its all about money, anything for sale if you pay the right price

 

[Lear70]

(Leonard) says AirTran would add flights from Mitchell International Airport, and bring lower fares for passengers flying from Milwaukee.

Hoeksema is dubious of those claims, questioning whether Milwaukee can sustain a major expansion.

He says Midwest's growth plan, which includes a regional jet service that launches in April, provides Midwest with a "significantly higher" value than the AirTran offer.​

Wait a second, Hoeksema. Which one is it? YOU are launching RJ service from your hub but question whether your hub can sustain a major expansion?

Who the h*ll wrote this article anyway? Every other paragraph is one "expert" contradicting another.

What a bunch of rubbish.

Meanwhile, Goldman Sachs is working up a detailed study of Midwest, including an updated valuation of the airline and strategic options to help Midwest maximize shareholder value, said Carol Skornicka, Midwest senior vice president of corporate affairs.

"It's too early to say what might happen once that process is completed", she said. "I think everybody recognizes something is going to happen; we just don't know what."

That's about the only thing there is to say about this. Nothing new here...

(Spelling, sentence structure, and punctuation corrected for proper editorialization due to crappy writing job by author.)

It looks like things may be starting to unravel for AirTran anyway, they are starting to lose money and they have a bunch of planes coming that they don't really know what to do with.

Ummm... what are you talking about?

Yeah, we lost money this quarter. So did a lot of other airlines.

We'll still be profitable for the year.

Just like last year.

And the year before that... and so on and so forth.

Not hugely profitable, but as long as they're making huge $$$ on their stock options and bonuses and can still post a yearly profit, I doubt the investors will start running away.

Do you know ANYTHING about the airline business?

 

[fam62c]

Wait a second, Hoeksema. Which one is it? YOU are launching RJ service from your hub but question whether your hub can sustain a major expansion?​

Who the h*ll wrote this article anyway? Every other paragraph is one "expert" contradicting another.​

What a bunch of rubbish.
​

That's about the only thing there is to say about this. Nothing new here...

(Spelling, sentence structure, and punctuation corrected for proper editorialization due to crappy writing job by author.)

Ummm... what are you talking about?

Yeah, we lost money this quarter. So did a lot of other airlines.

We'll still be profitable for the year.

Just like last year.

And the year before that... and so on and so forth.

Not hugely profitable, but as long as they're making huge $$$ on their stock options and bonuses and can still post a yearly profit, I doubt the investors will start running away.

Do you know ANYTHING about the airline business?

Lear 70:

Don't get me wrong, I'm not bashing Airtran. I respect the company for what they have accomplished and their history of making money in a tough environment. Also, I know that a quarterly loss is not that big a deal. Here's what concerns me though: Airtran is seeing declining RASM and they are still adding more capacity. This reminds me of the old joke: "we're losing money but we're making it up in volume." You tell me, where are all the profitable markets for all the new 737's? Joe Leonard knows this is a problem and realizes that ATL, Florida and running up and down the east coast isn't cutting it anymore. Airtran needs higher yield flying and that's why they are interested in Midwest and doing more East/West flying with a midwestern hub. You don't have to listen to me, listen to your own CEO.

 

[fam62c]

fam62c, its all about money, anything for sale if you pay the right price

FlyWolf:

I agree with you 100%, but it's going to be harder if the incumbent management is fighting back hard. There's no question that Airtran can do it if they have the money but they don't seem to be coming up with more money. I don't think they will get to see the books at 11.25 and without seeing the books they may not offer more. They were in a huge hurry for this deal when they first went public but now they are doing nothing but trying to get it done at 11.25 which will not work. If MEH has a profitable 4Q and a 2006 profit the price of the stock will rise on it's own and make it tougher for Airtran. If they want this they need to get it done because MEH is probably going to get more expensive not cheaper.

 

[Murphy]

Perhaps a good night of scotch drinking and cowtipping may get the deal done.

 

[Ty Webb]

If MEH has a profitable 4Q and a 2006 profit the price of the stock will rise on it's own and make it tougher for Airtran. If they want this they need to get it done because MEH is probably going to get more expensive not cheaper.

Most of MEH's stock value is not driven by its Enterprise Value, or as a multiple of earnings, it's the result of a huge run-up due to whispers of this deal and its subsequent announcement.

Once AirTran backs away from it, the stock price will fall back to earth- and hard.

 

[Ty Webb]

Perhaps a good night of scotch drinking and cowtipping may get the deal done.

I thought those two activities were mutually exclusive.


.

 

[Lear70]

I thought those two activities were mutually exclusive.

No, they're not, as I had the misfortune to learn one night here in TN. uke:

I also learned that there isn't an easy way to discern between a young bull that's still almost full-size and a sleeping cow (female). Until they wake up after you've knocked them over. :lol:

Don't get me wrong, I'm not bashing Airtran.

No worries, everything you posted below is pretty accurate stuff, I might have misinterpreted the tone of your earlier post, pretty hard to convey sarcasm and tone on a message board.

Here's what concerns me though: Airtran is seeing declining RASM and they are still adding more capacity. This reminds me of the old joke: "we're losing money but we're making it up in volume." You tell me, where are all the profitable markets for all the new 737's? Joe Leonard knows this is a problem and realizes that ATL, Florida and running up and down the east coast isn't cutting it anymore. Airtran needs higher yield flying and that's why they are interested in Midwest and doing more East/West flying with a midwestern hub. You don't have to listen to me, listen to your own CEO.

Excellent points, and I definitely share your concern.

I believe quite a few of the routes that we run point to point are not great markets.

I also believe our marketing department isn't doing SQUAT in those markets to stimulate brand recognition.

Those two factors alone aren't helping. Yes, we could use a Midwest hub (no pun intended), and we SHOULD, but I don't believe MKE is it. STILL too far for our 717's in terms of stage length to run up and down the West Coast.

I'd personally like to see us open a hub somewhere much further south and a little further west, make it a 717 base, and do more west coast point-to-point and let the 737's continue to bring east coast traffic in from the west coast cities.

Without buying Midwest.

Obviously I have no say in the matter, but I believe that kind of service would do more for our RASM than more PHF-ROC flights.

 

[SkiFishFly]

Lear 70:

Don't get me wrong, I'm not bashing Airtran. I respect the company for what they have accomplished and their history of making money in a tough environment. Also, I know that a quarterly loss is not that big a deal. Here's what concerns me though: Airtran is seeing declining RASM and they are still adding more capacity. This reminds me of the old joke: "we're losing money but we're making it up in volume." You tell me, where are all the profitable markets for all the new 737's? Joe Leonard knows this is a problem and realizes that ATL, Florida and running up and down the east coast isn't cutting it anymore. Airtran needs higher yield flying and that's why they are interested in Midwest and doing more East/West flying with a midwestern hub. You don't have to listen to me, listen to your own CEO.

I also think we will see some improvement when Delta comes out of bankruptcy and is more profit oriented. Right now they seem to do a lot of things to oppose AirTran even if it means a loss for them. I hope that when they come out of bankruptcy they are a little wiser. They will still have much higher costs than AirTran.
I agree we are kinda out of room in Atlanta. We have lots of east-west flying we could do with the 737s, just a lack of gates to put them on in Atlanta. I do hope someone down there in mgmt has the big picture. They certainly haven't shared it with us yet.

 

[scarlet]

yeah Transcon is where the money is=NOT Airtran posted a loss because of the bonuses to upper magmt. Airtran CEO needs to look at JB's CEO pay!!!!