AirTran Holdings seeks court order against Midwest Air Group

[Lear70]

I think it's good. AAI is being proactive about ATL. When Delta comes out of ch. 11, ATL will be an insane battle ground. Big losses may be incurred. On both sides. The best way to dilute those losses is to grow outside of ATL. The best way for AAI to do this is through merger.

BINGO!

Well-said.

I will say this, with the stock at a 'premium' the BOD at Midwest is really hanging it out there saying they can do it alone. If AirTran goes away and the stock goes back to the 6-7 dollar range, there will be a mutiny.

IF AirTran rescinds their offer, you WILL see the stock price do EXACTLY that.

Whether there will be a "mutiny"? Who knows, I don't pretend to know the MEH Investor thought process, but I for one would be pretty P.O.'d to see my stock price stumble 50% in a few days.

The poison pill is a nonfactor, if they were that worried, they'd have done it by now.

They can't invoke the poison pill whenever they want, that's not how it works. It's a trigger point set off by a certain percentage of stock ownership by one person / corporation.

AirTran WILL have to either get the BOD to rescind the poison pill provision (there's actually a class-action suit by a few of the MEH investors against Midwest to accomplish exactly that), or they have to get the BOD to agree to the acquisition.

By pitching directly to the shareholders, they don't buy the stock they need immediately; they simply get the shareholders on board in favor of the sale and then essentially control enough votes to call a BoD meeting, kick out the existing BoD, put new BoD members in, vote out the poison pill, then call a simple majority vote to sell the company.

Sounds easy, but it's a crappy uphill battle and, IMHO, is the only way this thing is going to play out, but we'll see after the conference call today.

I have to fly, so if someone could post the highlights for me to read this afternoon, it would be mucho appreciated.

 

[EX_CV580FR8Dawg]

http://www.620wtmj.com/_content/news/story_6700.asp

 

[Steeler Fan]

http://biz.yahoo.com/prnews/070125/nyth073.html?.v=79


Press Release


Midwest Air Group Board Rejects AirTran Offer as Inadequate and Opportunistic; Reiterates Strength of Its Strategic Plan
Thursday January 25, 8:31 am ET
MILWAUKEE, Jan. 25 /PRNewswire-FirstCall/ -- The board of directors of Midwest Air Group, Inc. (Amex: MEH - News), parent company of Midwest Airlines, today announced it has unanimously recommended that Midwest's shareholders reject AirTran Holdings, Inc.'s (NYSE: AAI - News) unsolicited offer to acquire all outstanding shares of Midwest for a combination of $6.625 in cash and 0.5884 of a share of AirTran common stock and not tender their shares to AirTran.
The board, with its legal and financial advisors, reached its conclusion after careful consideration -- which included a thorough review of the AirTran offer, the various alternatives available to Midwest and Midwest's strategic plan. "Our board determined that AirTran's offer is opportunistic and undervalues Midwest," explained Timothy E. Hoeksema, chairman and chief executive officer. "The board believes that Midwest and its shareholders are poised to realize the benefits of Midwest's long-term strategic plan, and that today's earnings announcement indicates that those efforts are driving growth for the company."

 

[Steeler Fan]

How vocal was this guy during AA/TWA?

http://phoenix.bizjournals.com/milwaukee/stories/2007/01/22/daily22.html

Sen. Kohl: AirTran deal for Midwest to be closely scrutinized

The Business Journal of Milwaukee - 5:35 PM CST Wednesday



U.S. Sen. Herb Kohl of Wisconsin has sent a letter to AirTran Holdings Inc. chairman and chief executive officer Joe Leonard indicating his intention to closely review the proposed AirTran buyout of Midwest Air Group Inc. of Oak Creek.
As chairman of the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights, Kohl said he and others on the panel are concerned about consolidation in the airline industry, saying that further consolidation could lead to higher prices, lower quality of service, and loss of competitive choices.

Kohl expressed concerns specifically over AirTran's proposed takeover of what has become known as "Milwaukee's Hometown Airline," noting that Midwest: "is a company that is run by people who live and work here, who have a connection to our communities and who have earned loyalty that will not be replicated in an acquisition of Midwest Airlines by AirTran," Kohl's letter said.
"We are concerned that this merger could jeopardize the enormous consumer benefits realized by many thousands of travelers throughout Wisconsin, and compromise the frequency and efficiency of the service offered by Midwest Airlines at its Milwaukee hub and throughout the state."
Kohl also said it "is in the interest of Wisconsin consumers, as well as the greater Milwaukee economy, for Midwest Airlines to operate as a locally based, independent airline."
If AirTran continues to pursue its offer to acquire Midwest, Kohl told Leonard, "you can expect that the Antitrust Subcommittee will examine this proposed acquisition very carefully to ensure this transaction does not harm the interests of Wisconsin consumers or airline competition generally."
Kohl's letter, released by his office Tuesday, was written in response to a letter Leonard wrote to Kohl.

 

[ultrarunner]

Well, expect a pretty good sell-off at the bell.

 

[FlyWolf]

AirTran is not surprised by the rejection, said the company's president and chief operating officer, Bob Fornaro. The company will continue to court shareholders, he said.

So, I guess Airtran was expecting this rejection, it will be interesting to know what Goldman sacks report and recommendation is, and what will Airtran next move be.

 

[FlyWolf]

Well, expect a pretty good sell-off at the bell.

I think the positive numbers for the 4Q and 2006 will dampen some of the sell off since they beat the street projections, the saga continues.

 

[Donsa320]

Well, expect a pretty good sell-off at the bell.

Well, not quite....MEH up 57cents in the first 30 minutes...

 

[FlyWolf]

I know few guys who sold at $14, I am holding on to mine so far

 

[ultrarunner]

I know few guys who sold at $14, I am holding on to mine so far

Boy, I don't know. 14 bucks seems like ago exit point.

 

[FlyWolf]

Boy, I don't know. 14 bucks seems like ago exit point.

I know ultrarunner, kinda wish I sold too now, but thought keep it, wait and see.

Webcast at 10:00 am Central, on midwestairlines.com. for those who are interested.


Here is an actual link, its working now
http://phx.corporate-ir.net/phoenix.zhtml?c=88626&p=irol-irhome

 

[ultrarunner]

Even 13 bucks is not a bad exit strategy, IMO.

 

[Ty Webb]

Don't worry, you can always short it now to split the difference . . .

 

[Lear70]

Down to $12 and change now and still dropping in increments.

Will probably stabilize somewhere above $11 since AAI says they're still interested.

Not excessively surprising, but I'd like to hear the webcase (not currently available it says on the website).

 

[FlyWolf]

Very good numbers indeed, first profitable year in a LONG while, we really needed some good news, was getting tired of all the losses.

Some good news is the hedging, and new a/c announcement this year.


Midwest Air Group Reports Fourth Quarter and 2006 Results
Thursday January 25, 8:30 am ET Airline Reports Third Consecutive Quarterly Profit and Profitable Year Summary: Fourth Quarter and Full-Year 2006 vs. Fourth Quarter and Full-Year 2005 - Operating revenue: Q4: increased 17.9% to $168.3 million; 2006: increased 27.1% to $664.5 million - Net income: Q4: income of $3.6 million vs. loss of $13.8 million; 2006: income of $5.4 million vs. loss of $64.9 million - Diluted earnings per share: Q4: earnings of $0.16 vs. loss of $0.79; 2006: earnings of $0.29 vs. loss of $3.71 - Scheduled service revenue passenger miles: Q4: increased 16.3% to 1.0 billion on a 6.2% increase in capacity; 2006: increased 21.5% to 4.1 billion on a 13.1% increase in capacity - Revenue per available seat mile: Q4: increased 11.7% to 12.27 cents; 2006: increased 12.5% to 12.26 cents - Fuel prices: Q4: lower fuel prices positively impacted operating results by $0.9 million, or $0.04 per share - diluted; 2006: higher fuel prices negatively impacted operating results by $33.0 million, or $1.37 per

 

[FlyWolf]

I bet Lear70 is happy with the rejection news

 

[Ty Webb]

So if the earnings for the year was 29 cents per share, then the stock is really only worth about $6.00, which is likely where it will return to if this deal doesn't happen.

.

 

[FlyWolf]

No, don't think it will go that low, it was at $9.70 pre-merger talk.

I think it will go back to $11 range and stabilize there for a while till they announce the new a/c and routes.

 

[Lear70]

I bet Lear70 is happy with the rejection news

Naahhh. No real news; we pretty much figured that's what was going to happen.

I'll be happy when either:

a.) The New York Supreme Court rules that AAI can't have the shareholder's list (unlikely - it's a strong case).

b.) AAI announces it's just not worth the headache and drops the pursuit (unlikely, they're out on a limb now. Unless it was prohibitively expensive they have to save face and continue, not to mention it's still a financially good move for the company).

c.) Midwest announces they'll accept the offer and the Seniority Integration Arbitrator says there's 5 year fences in place.

 

[likeitis]

Naahhh. No real news; we pretty much figured that's what was going to happen.

I'll be happy when either:

a.) The New York Supreme Court rules that AAI can't have the shareholder's list (unlikely - it's a strong case).

b.) AAI announces it's just not worth the headache and drops the pursuit (unlikely, they're out on a limb now. Unless it was prohibitively expensive they have to save face and continue, not to mention it's still a financially good move for the company).

c.) Midwest announces they'll accept the offer and the Seniority Integration Arbitrator says there's 5 year fences in place.

You keep wanting this career projections bs but from my point of view is FL is screwed unless they merge with someone who can provide growth opportunities for FL. Your company can have all the orders in the world but you need a place to put them and it's obvious Joe and Bob are running out of places to put them. Your RASM is showing this. If you don't find a partner soon those deliveries may stop or slow drastically. You don't think that whatever carrier you merge with won't realize that if it wasn't for them your career expectations would be substantially less? It's pretty obvious to the FL pilots I've talked to that FL is in a pickle and needs a hand to get over the next hurdle. I don't put anything out of Bob's reach but he's in a corner. Delta post Ch11 will be like nothing FL has dealt with in the past.

Besides YX I don't see any other carrier who can absorb 60 airplanes over the next few years. MKE and MCI have more growth potential than (Frontier)DEN, SEA or LAX(Alaska). Maybe US Airways would work if the the Delta bid fails. No other carrier seems to be a good fit and Alaska and US Airways are long shots. STL may work out but my money would be on it being like your DFW buildup.

 

[Lear70]

You keep wanting this career projections bs but from my point of view is FL is screwed unless they merge with someone who can provide growth opportunities for FL.

You are certainly entitled to your opinion.

Most of us disagree with you.

Your company can have all the orders in the world but you need a place to put them and it's obvious Joe and Bob are running out of places to put them. Your RASM is showing this.

You're absolutely right, RASM is down on increased ASM's, which is a bad sign.

However,,,

We're still profitable. And until that changes (not likely anytime soon according to the numbers we've seen so far), we'll continue to take our aircraft.

If you don't find a partner soon those deliveries may stop or slow drastically.

Again, that's your OPINION, and one that's not shared by very many people who make their living off buying and selling airline stock - our stock price has been pretty neutral for quite a while now.

But I guess you're just smarter than the professional investors, huh?

You don't think that whatever carrier you merge with won't realize that if it wasn't for them your career expectations would be substantially less?

Nope.

Because your opinion is in the minority. Along with all the other people who bash this airline and don't understand why we are consistently profitable year after year.

Even a small profit is still a profit (not to mention the massive capital expenditures and one-time write-offs that just increase our value).

It's pretty obvious to the FL pilots I've talked to that FL is in a pickle and needs a hand to get over the next hurdle. I don't put anything out of Bob's reach but he's in a corner. Delta post Ch11 will be like nothing FL has dealt with in the past.

Again, your opinion.

I don't hear a lot of people singing the same song.

And here's a hint: we will STILL have a DRASTICALLY lower CASM than DAL post-bankruptcy.

And that's a FACT. Not an opinion.

Besides YX I don't see any other carrier who can absorb 60 airplanes over the next few years. MKE and MCI have more growth potential than (Frontier)DEN, SEA or LAX(Alaska).

Agreed, which is why I still believe this will happen, much to my dismay.

However, you still have YET to provide any logical, factual evidence that points to AAI being in the "pickle" you seem to think we're in.

When we post a loss for 2 or more consecutive YEARS (or even 1 year taken as a whole), maybe we'll revisit your opinions.

STL may work out but my money would be on it being like your DFW buildup.

Actually, I believe STL is one of the best announcements for service we've had in months.

Time will tell...

 

[Eagle757shark]

You keep wanting this career projections bs but from my point of view is FL is screwed unless they merge with someone who can provide growth opportunities for FL. Your company can have all the orders in the world but you need a place to put them and it's obvious Joe and Bob are running out of places to put them. Your RASM is showing this. If you don't find a partner soon those deliveries may stop or slow drastically.

Besides YX I don't see any other carrier who can absorb 60 airplanes over the next few years. MKE and MCI have more growth potential than (Frontier)DEN, SEA or LAX(Alaska). Maybe US Airways would work if the the Delta bid fails. No other carrier seems to be a good fit and Alaska and US Airways are long shots. STL may work out but my money would be on it being like your DFW buildup.

Some good points, St Louis may be a beginning of something to come for AirTran. There are a lot of vacant gates there. DFW did not happen because of the outcome with the Wright Amendement and probable was a smart thing considering we would have gone up against American on their strongest turf and Southwest next door at Love field. Would these two carriers put up the same fight in St Louis if AirTran attempted to build there, don't know. Southwest is more concerned with Midway and defending it and American is focusing on DFW and strengthing ORD. A mix of 737s and 717s in St Louis may work especially if you started off going to large cities from there. We shall see.

 

[FlyWolf]

You keep wanting this career projections bs but from my point of view is FL is screwed unless they merge with someone who can provide growth opportunities for FL. Your company can have all the orders in the world but you need a place to put them and it's obvious Joe and Bob are running out of places to put them. Your RASM is showing this. If you don't find a partner soon those deliveries may stop or slow drastically. You don't think that whatever carrier you merge with won't realize that if it wasn't for them your career expectations would be substantially less? It's pretty obvious to the FL pilots I've talked to that FL is in a pickle and needs a hand to get over the next hurdle. I don't put anything out of Bob's reach but he's in a corner. Delta post Ch11 will be like nothing FL has dealt with in the past.

Besides YX I don't see any other carrier who can absorb 60 airplanes over the next few years. MKE and MCI have more growth potential than (Frontier)DEN, SEA or LAX(Alaska). Maybe US Airways would work if the the Delta bid fails. No other carrier seems to be a good fit and Alaska and US Airways are long shots. STL may work out but my money would be on it being like your DFW buildup.

Midwest BOD in the letter to shareholders mentioned the following:

-- The board also took note of the comments made by Joe Leonard,
AirTran's chairman and chief executive officer, during his
conversation with Mr. Hoeksema on October 11, 2006, during which
Mr. Leonard expressed concerns regarding AirTran's business and
investor beliefs about AirTran's uncertain prospects and the impact
of those concerns on the future value of AirTran's common stock.
and:

* Under Wisconsin law and Midwest's Articles of Incorporation, the board
is authorized to consider the interests of stakeholders of Midwest
other than its shareholders -- including employees, suppliers,
customers and the communities in which it operates -- when considering
an offer of this type.
-- The board believes that the lack of a clear plan by AirTran to
serve the interests of constituencies other than shareholders
creates uncertainty about how such interests would actually be
served by the combined company.

Full letter available here:

http://phx.corporate-ir.net/phoenix.zhtml?c=88626&p=irol-newsArticle&ID=954189&highlight=


Also, the Midwest ALPA MEC today took a stand and changed from neutral to supporting the stand alone plan.

 

[ultrarunner]

No, don't think it will go that low, it was at $9.70 pre-merger talk.

I think it will go back to $11 range and stabilize there for a while till they announce the new a/c and routes.

Hard to say. If AAI had dropped out before the earnings call, I don't think MEH's numbers were that strong to keep the stock at a 11 dollar level. Heck, a dip today on a positive quarter? Still too much uncertainty.

I didn't catch up on the earnings call. Flywolf, did they say that this new a/c order was for an expansion? I had thought it was simply a replacement a/c for the MD80's and any expansion was going to be contracted out. Is MEH actually going to grow it's own fleet?

 

[Lear70]

From $13.40 on Monday down to $12.40 today's low to close around $12.67.

It'll probably hover there until the New York ruling comes back. If they go for AAI's case to divulge shareholder info, it'll probably stay neutral pending the outcome of a direct-to-shareholder campaign.

If not, the AAI offer will probably be rescinded, and we'll see the stock drop; how much is a mystery,,, definitely beyond my pay grade, but I'd bet at least initially lower than it was pre-offer.

 

[FlyWolf]

Just saw in the news one of Airtran management is in Milwaukee talking to the media (sorry didn't catch his name) but not Joe, or Bob, he said Airtran is not going anywhere and that they will still pursue the shareholders.

Ultrarunner, the two md80's are temporary for routes that NWA stopped serving, an announcement for the new growth a/c is coming this year. They needed to cover these routes fast and the quickest way was to get the 2 md80's. I am thinking 2nd quarter we will hear whether they decided on the bus or the 737.

 

[717capt]

I don't think we are screwed by any stretch. It is true DL will come out a leaner, meaner machine but I think they finally realized that they need to look after what they got instead of trying to hurt the other guy. Focus and build up of international routes is a good start, now they need to lose some of the heavy iron or at least re-deploy to more strategic routes and they might just make it. As far as career expectaions go I think they are pretty good here. Just ask any one of the 200-300 folks sending resumes every day. I guess they see something of a future. As far as not knowing where to put the airplanes, I think they have a pretty good idea. Someone mentioned STL or DFW or where ever. There are some very viable places to put a hub, but ask yourself, what is cheaper? buying MKE or starting from scratch in say STL? thats what it's all about. As soon as it costs less to build a hub from scratch than a merger, thats the way it will go. Initally at least.

Just wondering about one thing though. What will happen to all the new hires / recall types at DL and CO and all rest if the age thing is raised to 65?

 

[Lear70]

Just wondering about one thing though. What will happen to all the new hires / recall types at DL and CO and all rest if the age thing is raised to 65?

They'll stagnate. In some cases like CAL, stagnate badly (4-7 years).

It all depends on projected retirements for each airline, they're all different.

I believe CAL has the highest number of projected age 60 retirements in the next 5 years, followed closely by UAir, DAL, and AA, then NWA and SWA at a slower pace. AAI and MEH have 2-3 a month which is pretty low, JBLU pretty much nonexistant age 60 attrition.

No need to turn this into an age 65 debate; we've beaten that into the ground. But at airlines like ours (relatively young LCC's) it's not much of a factor.

I'm definitely more concerned with declining RASM and finding more profitable routes, but I trust JL and BF to do their job - their own paycheck is riding on it!

 

[Moustache]

Airtran 4Q loss:
http://news.moneycentral.msn.com/ticker/article.aspx?Feed=AP&Date=20070126&ID=6394488&Symbol=US:MEH

 

[Eagle757shark]

Airtran 4Q loss:
http://news.moneycentral.msn.com/ticker/article.aspx?Feed=AP&Date=20070126&ID=6394488&Symbol=US:MEH

But continue your thought: 8th consecutive year of showing a annual profit of 15.5 million dollars. Just about doubling 2005. Looking at what has happened in 2006, AirTran spent a lot of money upgrading the airline. I believe every pilot on the property could testify to that. ACARS, Central Load Planning, FLICA, CASS and numerous other improvements and still came out ahead for the year 15.5 million. Not too bad! Plus they financed all the aircraft to be delivered for the full year of 2007. Progress is being made and that is what you want to see. Now if we can work on expanding outside of Atlanta.....stay tuned!