AirTran management makes in-person pitch to Midwest board

[Joey Bayonne]

AirTran management makes in-person pitch to Midwest board
Monday July 16, 5:37 pm ET Management of AirTran Holdings Inc. met with Midwest Air Group Inc.'s board of directors Monday in Milwaukee to present its case for a merger between the competing airline operators. "The Midwest board asked a lot of very thoughtful questions," AirTran spokesman Kevin Healy said.
All nine members of Midwest's board were present in person for the meeting, held in downtown Milwaukee.
The meeting lasted for a couple of hours, Healy said.
Midwest management couldn't immediately be reached for comment.
Midwest's board of directors agreed to permit AirTran management to make an in-person presentation after AirTran succeeded in June in having its slate of three directors elected to Midwest's nine-member board.
Healy declined to comment on whether there would be future meetings between the two airlines.
Joining Healy at the meeting were AirTran Chairman Joe Leonard, Chief Operating Officer Robert Fornaro, Chief Financial Officer Stanley Gadek and general counsel Richard Magurno.
Orlando-based AirTran Holdings, which operates AirTran Airways, has been involved in a protracted hostile takeover attempt of Oak Creek, Wis.-based Midwest Air Group, which operates Midwest Airlines.
AirTran has extended its offer of $15 per share, valued at $389 million, until Aug. 10.
AirTran made its initial offer of $290 million in October 2006. It has increased the offer twice and extended the bid several times.
In addition, Midwest shareholders had agreed to tender more than 14.6 million shares of Midwest to Galena Acquisition Corp., a wholly owned subsidiary of AirTran, as of June 8, the prior expiration date for the tender offer. The total represents nearly 60 percent of all outstanding shares.
Published July 16, 2007 by the Orlando Business Journal

 

[FlyWolf]

Any other info about the meeting?

 

[FlyWolf]

From the Milwaukee paper today:

AirTran talks to Midwest

Sides say little after presentation, which encourages observers

By TOM DAYKIN
[email protected]

Posted: July 16, 2007

For the first time, Midwest Air Group Inc.'s board of directors on Monday heard about AirTran Holdings Inc.'s hostile takeover offer directly from AirTran itself.

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The relative silence that followed could be golden for AirTran, some observers said.
AirTran Chairman Joe Leonard and other company executives made a two-hour presentation to Midwest Air's nine-member board. That group includes three directors nominated by AirTran and elected by shareholders last month at the annual meeting.
AirTran's presentation to the Midwest Air board, including Chairman Timothy Hoeksema, resulted in no big announcements - and little public comment from either side.
"They asked a lot of thoughtful questions," Kevin Healy, AirTran vice president of planning, said about Midwest Air directors. He declined to comment further.
Carol Skornicka, Midwest Air senior vice president of corporate affairs, said: "We appreciate the information they shared. The board took no action."
Marisa Thompson, an airline industry analyst at Chicago-based Morningstar Corp., said that low decibel level, in what has been an acrimonious battle of news releases, could prove significant.
"If they're actually having a meaningful discussion in the boardroom, there's a distinct possibility that a deal is imminent, in my opinion," said Thompson, a sale advocate.
Michael Boyd, who operates Boyd Group Inc., an aviation consulting firm in Evergreen, Colo., said AirTran's presentation to the board, if similar to the company's previously disclosed plans, was "highly believable." Boyd said it was his feeling that Midwest Air board members would engage in serious discussions with Hoeksema about the AirTran presentation.
It was at Midwest Air's June 14 annual meeting that the board invited AirTran to make the presentation.
Hoeksema said the director election results, with AirTran nominees John Albertine, Jeffrey Erickson and Charles Kalmbach winning by a 2-to-1 ratio, showed that Midwest Air shareholders wanted the board to listen to their concerns.
But Hoeksema also said at that time that hosting a presentation didn't mean the board would change its position on AirTran's tender offer, which expires Aug. 10. Nearly 60% of Midwest Air's shares have been pledged to AirTran.
Hoeksema, who also is Midwest Air's chief executive officer, said in June that AirTran's stock-and-cash offer undervalued Midwest Air.
He also said Midwest Air planned to stick with its strategy of expanding the company gradually the next two years through new departures from Milwaukee and other cities.
Leonard, who also is AirTran's CEO, has said that Midwest Air's growth plan won't work. Leonard has outlined plans to expand flights out of Milwaukee greatly if his company buys Midwest Air.
Leonard has vowed to increase the Milwaukee-based work force to accommodate that expansion, which is based on attracting more passengers, especially from northern Illinois, with lower fares and more destinations.
Hoeksema has questioned whether that expansion plan is sustainable. Leonard, in turn, has noted that Midwest Air has twice lowered its earnings forecast for 2007.
The current value of AirTran's tender offer is $15.22 a share, based on AirTran's closing price Monday of $10.64, up 1 cent. That is a 6.5% premium over Midwest Air's closing price of $14.29, down 11 cents.
Midwest Air stock closed at $9.08 on Dec. 12, the day before AirTran's offer was publicly disclosed.

 

[CitationLover]

I would expect something definitive by the earnings conference calls towards the end of the month. I would agree that no statements from MEH means a deal is being discussed.

 

[Lear70]

Could go either way...

The board could be playing it smart, acting like they're seriously considering the deal, wait 30-60 days, then move to kill it while telling the shareholders they did "due dilligence investigation" and still believe in their stand-alone plan.

No anti-trust or failure to represent claims from the shareholders, and it goes to next summer's BoD meeting to get the next 3 voted in before it goes through. Another year for Timmy & the senior management group to draw their salaries...

Or, it could mean exactly what you're saying: that it's going to go through, they're now just discussing the best way to get the money a little higher and get some guarantees, in writing, for the senior management peeps.

Not saying that's gospel, just seems to make sense from both directions. My big indicator is how fast they put out their decision. The longer it takes, the more likely a "no" vote coming back is.

 

[CitationLover]

Could go either way...

The board could be playing it smart, acting like they're seriously considering the deal, wait 30-60 days, then move to kill it while telling the shareholders they did "due dilligence investigation" and still believe in their stand-alone plan.

to me this would be a waste of money (thats actually doing more due diligence, i get what you're inferring with the quotes). i mean this was already done by goldman sachs. what has changed since april when this was accomplished and a recommendation made? air tran has been fairly consistent with their expectations in MKE. the questions (items like the employees in MKE HQ and their jobs) seem to be steering to a merger.

if they do more "due diligence" and come back with a no message, i wonder if the position of the individual board members will be made public, ie did the new board members vote for a merger or didn't they.

 

[ATLDRVR]

If any one is interested here is a link to the portion of the 8-K filing which includes the merger presentation made to the MEH board.

http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?dcn=0001193125-07-155825&Type=HTML

 

[MarineGrunt]

"Airtran will eliminate service to small markets throughout Wisconsin, Kansas and Missouri. Airtran has stated that RJs do not work in a low cost business model"

I guess this means the writing is on the wall for Skyway and SkyWest.

 

[CitationLover]

"Airtran will eliminate service to small markets throughout Wisconsin, Kansas and Missouri. Airtran has stated that RJs do not work in a low cost business model"

I guess this means the writing is on the wall for Skyway and SkyWest.

sure 50 seat RJ's, but not 70 or 90 seat ones. look at their former TA'd scope provisions.

skyway/skywest routes are shown on both the current and proposed route structures so i guess these will be the new 717 overnights. can't wait for HPN again and it's feet smell terminal or perhaps they will stick around as they say:

The Milwaukee hub offers a unique opportunity for Regional Jet feeder service that didn't exist in Atlanta due to runway and gate limitations.

 

[Citrusflyer]

http://biz.yahoo.com/bizj/070717/1491905.html?.v=2

Tuesday July 17, 11:39 am ET
Management of AirTran Holdings Inc. is pushing to establish target dates for reaching a merger agreement with Midwest Air Group Inc. prior to Aug. 10, when AirTran's latest tender offer expires. AirTran made its initial offer of $290 million in October 2006. It has increased the offer twice and extended the bid several times. Its current offer is $15 per share, valued at $389 million.
AirTran Holdings management met with Midwest Air Group's board of directors July 16 in Milwaukee to present its case for a merger between the competing airline operators.
All nine members of Midwest's board were present in person for the meeting, held in downtown Milwaukee.
"The board appreciated the information that was shared," says Midwest spokeswoman Carol Skornicka. "It was more detailed that what we'd received previously, but the essence of the proposal hasn't changed."
The board took no action following the presentation, Skornicka says.
However, Orlando-based AirTran Holdings, which operates AirTran Airways, wants to quickly move toward reaching a merger agreement with Midwest Air Group Inc., the Oak Creek, Wis.-based parent company of Midwest Airlines.
In its presentation to Midwest's board, AirTran management stated that the next desired steps are to establish a schedule for due diligence, initiate discussions for merging and integrating AirTran and Midwest, and establishing steps and target dates aimed at reaching an agreement prior to Aug. 10, when the tender offer expires.
AirTran management had little to say following the meeting with Midwest's board.
"The Midwest board asked a lot of very thoughtful questions," says AirTran spokesman Kevin Healy.
Midwest's board of directors agreed to permit AirTran management to make an in-person presentation after AirTran succeeded in June in having its slate of three directors elected to Midwest's nine-member board.
Joining Healy at the meeting were AirTran chairman Joe Leonard, chief operating officer Robert Fornaro, chief financial officer Stanley Gadek, and general counsel Richard Magurno.
In the presentation to Midwest's board, a copy of which Midwest filed with the U.S. Securities and Exchange Commission early Tuesday, AirTran management stated that a merger between the rival airline operators would result in 1,100 new jobs in Milwaukee and 500 in Kansas City, Midwest's secondary hub.
A merger also would provide Milwaukee and Kansas City with a combined $1.5 billion "economic stimulus," according to AirTran.
AirTran management also continued to question the value of Midwest's long-term plan to remain a stand-alone airline. The credibility of Midwest's plan and its future value have been "compromised" by Midwest's recent earnings revisions, AirTran contends.
"The vulnerability of Midwest's plan is clear from recent unit revenue weakness even without additional competition," AirTran stated in its presentation.
AirTran also stated that Midwest "lacks the resources to exploit their core assets in Milwaukee and Kansas City."
Combining the strengths and networks of both carriers would accomplish more than either carrier could do alone, AirTran management says.