AirTran expansion likely, says Hoeksema
But suitor's plans for Midwest aren't sustainable, he says
By AVRUM D. LANK
[email protected]
Posted: April 18, 2007
AirTran Holdings Inc. will keep its promise to expand service in Milwaukee if it is successful in its hostile takeover bid for Midwest Air Group Inc., Midwest Chairman Timothy E. Hoeksema conceded Tuesday.
But the carrier based in Orlando, Fla., will find that the increase is not sustainable, he added in a talk to about 200 at an Economic Forum sponsored by the Milwaukee Jewish Federation at the Jewish Home and Care Center. In an interview after the speech, Hoeksema declined to say how long it would take for the strategy to fail.
AirTran has laid out specific plans for increasing service in Milwaukee should its offer succeed. Among other things, the company plans to have 215 daily departures from Milwaukee by 2009, which it says is a 34% increase from Midwest's existing schedule.
AirTran says that by lowering fares, marketing more aggressively in northern Illinois and increasing connection possibilities at Milwaukee's Mitchell International Airport, it will generate the traffic needed to make its plans work.
Included in those plans is doing away with Midwest's two-across seating and adding more seats per flight.
Hoeksema said, however, that "good customer service" is an important part of running an airline. He also questioned AirTran's increased passenger projections, saying they would require stimulating markets much more than is prudent to expect.
Illinois won't yield much
In particular, Hoeksema said he doubted AirTran could get a lot more passengers from northern Illinois.
"There are not huge opportunities (in Illinois), as other people might think there are," he said. Fare differentials between Mitchell and Chicago airports have closed in recent years, and Hoeksema noted that Midwest already has a lot of frequent fliers from northern Illinois.
Midwest has been pursuing its own expansion plan, which is more modest and more in tune with the Milwaukee market, Hoeksema said.
The Oak Creek-based company is parent of Midwest and Skyway airlines.
Midwest last week rejected as too low AirTran's offer of $9 cash plus 0.5842 of a share of its stock for each share of Midwest. At Tuesday's closing prices, that was worth $15.90, a 12.4% premium over Midwest's closing price of $14.15 a share.
In his speech, Hoeksema reiterated that there is more long-term value in Midwest as a stand-alone entity. In the interview, Hoeksema declined to say what price might be right for Midwest, merely that "$15 isn't it."
Midwest stock was down 20 cents in trading Tuesday. AirTran shares closed at $11.81, down 2 cents.
But suitor's plans for Midwest aren't sustainable, he says
By AVRUM D. LANK
[email protected]
Posted: April 18, 2007
AirTran Holdings Inc. will keep its promise to expand service in Milwaukee if it is successful in its hostile takeover bid for Midwest Air Group Inc., Midwest Chairman Timothy E. Hoeksema conceded Tuesday.
But the carrier based in Orlando, Fla., will find that the increase is not sustainable, he added in a talk to about 200 at an Economic Forum sponsored by the Milwaukee Jewish Federation at the Jewish Home and Care Center. In an interview after the speech, Hoeksema declined to say how long it would take for the strategy to fail.
AirTran has laid out specific plans for increasing service in Milwaukee should its offer succeed. Among other things, the company plans to have 215 daily departures from Milwaukee by 2009, which it says is a 34% increase from Midwest's existing schedule.
AirTran says that by lowering fares, marketing more aggressively in northern Illinois and increasing connection possibilities at Milwaukee's Mitchell International Airport, it will generate the traffic needed to make its plans work.
Included in those plans is doing away with Midwest's two-across seating and adding more seats per flight.
Hoeksema said, however, that "good customer service" is an important part of running an airline. He also questioned AirTran's increased passenger projections, saying they would require stimulating markets much more than is prudent to expect.
Illinois won't yield much
In particular, Hoeksema said he doubted AirTran could get a lot more passengers from northern Illinois.
"There are not huge opportunities (in Illinois), as other people might think there are," he said. Fare differentials between Mitchell and Chicago airports have closed in recent years, and Hoeksema noted that Midwest already has a lot of frequent fliers from northern Illinois.
Midwest has been pursuing its own expansion plan, which is more modest and more in tune with the Milwaukee market, Hoeksema said.
The Oak Creek-based company is parent of Midwest and Skyway airlines.
Midwest last week rejected as too low AirTran's offer of $9 cash plus 0.5842 of a share of its stock for each share of Midwest. At Tuesday's closing prices, that was worth $15.90, a 12.4% premium over Midwest's closing price of $14.15 a share.
In his speech, Hoeksema reiterated that there is more long-term value in Midwest as a stand-alone entity. In the interview, Hoeksema declined to say what price might be right for Midwest, merely that "$15 isn't it."
Midwest stock was down 20 cents in trading Tuesday. AirTran shares closed at $11.81, down 2 cents.
