AirTran/Midwest deal article

[Eagle757shark]

see below

 

[FlyWolf]

I'm for the merger. I think it will strengthen both companies. That means job security for all of us pilots.
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I agree, well said Ski, I do have few good friends from my previous regional job that went to airTran and they are all for the merger also.

 

[Eagle757shark]

For AirTran to flood the MKE market with capacity to try to run Midwest out of business would be financial suicide for AirTran! AirTran can no more afford to just piss away money. To believe this is total arrogance and that will get AirTran into trouble very quickly. THOSE WHO FORGET HISTORY ARE DOOMED TO REPEAT IT! Northwest tried this with ATA in INDY, where is Northwest today, in Ch.11. Delta tried this with AirTran and Jetblue, where are they.
AirTran has not shown a quarterly profit since the 2nd quarter of 2006. Fortunately that was enough to show a profit for all of 2006. With AirTran forecasting a loss for the first quarter of 2007, they could ill afford to just pissing away money to get at Midwest.

 

[Kharma Police]

I'm for the merger. I think it will strengthen both companies. That means job security for all of us pilots.
I will welcome the Midwest folks - even though I am fairly certain this will delay my upgrade to some degree.

I don't see how this merger could benefit AirTran, except to provide us some place to put our 73s.There is a reason why MKE is an underutilized airport. The problem with Milwaukee is that it is too close to Chicago. Joe seems to think we will draw people from northern Chicago despite the fact that you have the worlds second busiest airport with AA and UAL offering flights everywhere in the world and MDW with SWA offering flights everywhere in the USA. Midwest does an excellent job with the amount of flights and service they provide, I don't think there is a market for the kind of growth that AirTran is promising. Its like having a hub in Chattanooga instead of Atlanta. We missed a once in a life time opportunity with the ATA gates in MDW.

 

[FlyWolf]

I respectfully disagree, when you operate out of a smaller but close enough airport to a major city like Chicago, you stay out of competing directly on the same route with the big guys "UAL/ AA". You also avoid Chicago nightmare delays when the weather hits, and you will get all the people in Northern Illinois who don't want to deal with road traffic or O'hare in general. If anything to be learned from SWA model is to see they try to stay out of major airports for the above reasons.

 

[Kharma Police]

I respectfully disagree, when you operate out of a smaller but close enough airport to a major city like Chicago, you stay out of competing directly on the same route with the big guys "UAL/ AA". You also avoid Chicago nightmare delays when the weather hits, and you will get all the people in Northern Illinois who don't want to deal with road traffic or O'hare in general. If anything to be learned from SWA model is to see they try to stay out of major airports for the above reasons.

Using that argument then you should be oversold on every flight and ordering larger aircraft, not RJs. I could be wrong but is Northwest scaling back in MKE? I grew up in northern Chicago, and it never occurred to my family to drive up to Wisconsin to catch a flight. You have two large mega carriers that offer very competitive prices to the same destinations that Midwest and AirTran provide. You guys have brand loyalty in Milwaukee because of the excellent service you provide to your business travelers. For a family going on vacation in Chicago, if the price is right they will fly out of ORD or MDW not drive to MKE.

 

[Steeler Fan]

I grew up in northern Chicago, and it never occurred to my family to drive up to Wisconsin to catch a flight.

I think now with Internet (check other airports close to home) options, maybe we'll get some takers.

Maybe we'll advertise more (but I'm not holding my breath).


Go Steelers!


Since you're from Chicago, help me with this.

Are there any Chicago residents who claim to be both Cubs' Fans and White Sox fans? Just curious.

 

[Steeler Fan]

I'm for the merger. I think it will strengthen both companies. That means job security for all of us pilots.
I will welcome the Midwest folks - even though I am fairly certain this will delay my upgrade to some degree.

If this merger puts us in a more stable employment situation 10-20 years from now, then I completely agree with you.

 

[mad691]

Using that argument then you should be oversold on every flight and ordering larger aircraft, not RJs. I could be wrong but is Northwest scaling back in MKE? I grew up in northern Chicago, and it never occurred to my family to drive up to Wisconsin to catch a flight. You have two large mega carriers that offer very competitive prices to the same destinations that Midwest and AirTran provide. You guys have brand loyalty in Milwaukee because of the excellent service you provide to your business travelers. For a family going on vacation in Chicago, if the price is right they will fly out of ORD or MDW not drive to MKE.

The same argument can made about SWA in BWI. Most people said they would not drive to BWI when you offer more destinations and better fares at DCA and IAD. Also the same was made when JBLU started at JFK. They all said that nobody would drive from the city to JFK to catch a flight to FLA when more destinations are out LGA and EWR. The question is whether they can do it profitably or not. They are going to need a feeder to make this work. 717's and 737's are not going to cut it in MKE. Airtran pilots better have a good scope in the next contract. I can easily see E-170's and E-190's out of there if this deal goes through.

 

[Kharma Police]

Are there any Chicago residents who claim to be both Cubs' Fans and White Sox fans? Just curious.[/quote]

The fans used to be segregated by north side (Cubs) and south side (Sox). The Windy City Classic (inner league game) has gotten pretty nasty with fights over the years. I was happy for the Sox when they won the World Series but I would not consider myself a fan. I’m sure its the same for Mets / Yankees fans?

 

[gt1900]

Dont forget guys.. AAI wouldn't have to fly every route Midex does to put them out of business.. Just fly the very few routes Midex has that makes them money.. A little competition on MKE-BOS, MKE-New York, and such would go a long way to kill Midex.. If AAI buys Midex you can bet that they will expand into MKE and pull pax out of Chicago.. But, they don't even have to pull that many. ORD and MDW are great hubs because of thier location. MKE is a close second.. MKE is a great city for connecting east coast to west coast city's.. So, you have all the pax in MKE, the northern chicago pax, and all the connecting pax.. AAI will be able to expand MKE huge..

 

[mnboyev]

ahhh..bs...Tranny's not gonna pull that crap...why in sam heck would we start now... AirTran is just lookin for a hub to do east west flyin... Get er done...When is the party!! I'll be the first to say welcome....can I buy ya brew ...and swap ice fishin stories ....

 

[likeitis]

Dont forget guys.. AAI wouldn't have to fly every route Midex does to put them out of business.. Just fly the very few routes Midex has that makes them money.. A little competition on MKE-BOS, MKE-New York, and such would go a long way to kill Midex.. If AAI buys Midex you can bet that they will expand into MKE and pull pax out of Chicago.. But, they don't even have to pull that many. ORD and MDW are great hubs because of thier location. MKE is a close second.. MKE is a great city for connecting east coast to west coast city's.. So, you have all the pax in MKE, the northern chicago pax, and all the connecting pax.. AAI will be able to expand MKE huge..

YX's largest money makers are all slot controlled so good luck with that. MKE, OMA and MCI to DCA and MCI and MKE to LGA. MKE-BOS is most likely profitable though seasonal. There may be a few others that make money some months and break even others but for the most part 90% of the airlines routes are break even on pax's revenue with a few that make them some cash. They do make money with onboard services and even more with cargo and mail contracts.

 

[gt1900]

Pretty sure AAI has gates and slots at all those airports... I would think that it wouldn't take much to move a flight or 2 to match Midex on any of those routes.. AAI also has slots at LGA and DCA... I would think it would be fairly easy to give up a CAK-LGA and an ATL-LGA to add a couple flights between MKE and LGA or MKE-DCA etc....... So, don't be so sure...

 

[likeitis]

Pretty sure AAI has gates and slots at all those airports... I would think that it wouldn't take much to move a flight or 2 to match Midex on any of those routes.. AAI also has slots at LGA and DCA... I would think it would be fairly easy to give up a CAK-LGA and an ATL-LGA to add a couple flights between MKE and LGA or MKE-DCA etc....... So, don't be so sure...

DCa requires route approval plus slots. So no you can't just take away your atl-dca slots and go from dca to mke. The gov't awards routes out of DCA.

 

[gt1900]

What I'm saying is AAI could probably still double up most of the money making routes so Midex would not be able to make money.. Midex only has a few routes which make it money, that makes midex very vulnerable.. Plus the fact that they are expaninding with RJ's and on routes that are stupid.. MCI-SEA is a stupid route when you have to compete against SWA yet SEA-MKE isnt served by anyone.. With those kinds of business decisions, I think it would be easy to burry Midex..

 

[FlyWolf]

How do you know that MCI-SEA is a "stupid route"? this service didn't even start yet to judge if its a "stupid" route, there are some business travelers that don't like the cattle cart service (with all do respect to swa).

MCI-SEA is also marketed as MKE-SEA with one stop (35 minuets) in MCI mainly because of the 17 range plus put few premium class service seats out of MCI to SEA. FYI, SEA is the number 1 requested destination from our customers and frequent flayers for a while now.

 

[njcapt]

Since you're from Chicago, help me with this.

Are there any Chicago residents who claim to be both Cubs' Fans and White Sox fans? Just curious.

Life-long Chicagoan, here.

Cubs fans rooted sincerely for the Sox in the 2005 Series. Sox fans would root for the F'ing Yankees if the Cubs ever made the Series.

How do you know that MCI-SEA is a "stupid route"? this service didn't even start yet to judge if its a "stupid" route, there are some business travelers that don't like the cattle cart service (with all do respect to swa).

MCI-SEA is also marketed as MKE-SEA with one stop (35 minuets) in MCI mainly because of the 17 range plus put few premium class service seats out of MCI to SEA. FYI, SEA is the number 1 requested destination from our customers and frequent flayers for a while now.

Vanguard made serious bucks on MCI-SEA. Wasn't enough to save the day, though. We had red-eyes from our west coast cities (LAX, LAS, SEA) and, connecting to LGA, MDW and ATL, we had serious loads. No reason it shouldn't be the same for MidEx.

 

[Eagle757shark]

What I'm saying is AAI could probably still double up most of the money making routes so Midex would not be able to make money.. Midex only has a few routes which make it money, that makes midex very vulnerable.. Plus the fact that they are expaninding with RJ's and on routes that are stupid.. MCI-SEA is a stupid route when you have to compete against SWA yet SEA-MKE isnt served by anyone.. With those kinds of business decisions, I think it would be easy to burry Midex..

WHAT? AirTran is in the business of earning money, not chasing Midwest to run them out of business. If you are just going to match them on routes out of MKE to prove some point (which would be disasterous for AirTran) why not just up your offer? Listen to yourself, lets lose money and run them out of business. Well, I hope AirTran's management doesn't tread down that path or we can all start dusting off the resumes. MCI-SEA may not be a stupid route for Midwest, if the Midwest clients desire such a route. I believe Midwest and Southwest cater to different type clients. Again read what Midwest management says, the offer is to low. What is the magic number, I don't know. Only time will tell.

 

[likeitis]

What I'm saying is AAI could probably still double up most of the money making routes so Midex would not be able to make money.. Midex only has a few routes which make it money, that makes midex very vulnerable.. Plus the fact that they are expaninding with RJ's and on routes that are stupid.. MCI-SEA is a stupid route when you have to compete against SWA yet SEA-MKE isnt served by anyone.. With those kinds of business decisions, I think it would be easy to burry Midex..

Wrong again. We compete head to head with LUV on mci-lax and this is in the top 3 for load factors every month. Like everyone has said luv and meh have completely different clientele. Both can exist in most markets. Both do what they are designed to do the best in the industry.

 

[SkiFishFly]

What I'm saying is AAI could probably still double up most of the money making routes so Midex would not be able to make money.. Midex only has a few routes which make it money, that makes midex very vulnerable.. Plus the fact that they are expaninding with RJ's and on routes that are stupid.. MCI-SEA is a stupid route when you have to compete against SWA yet SEA-MKE isnt served by anyone.. With those kinds of business decisions, I think it would be easy to burry Midex..

Are you a graduate of the same School of Airline management that Delta and NWA prefer for their managers?

 

[248to2.8]

What I'm saying is AAI could probably still double up most of the money making routes so Midex would not be able to make money.. Midex only has a few routes which make it money, that makes midex very vulnerable.. Plus the fact that they are expaninding with RJ's and on routes that are stupid.. MCI-SEA is a stupid route when you have to compete against SWA yet SEA-MKE isnt served by anyone.. With those kinds of business decisions, I think it would be easy to burry Midex..

Yet another prime exmaple of why we fly airplanes and don't run airlines. Thank God for that. Maybe talk to NWA how that whole "lets copy MEH routes" turned out for them.

 

[Lear70]

NWA is not a very good example in this case.

I was flying in that system at the time. NWA threw a bunch of RJ's that weren't profitable to begin with into both IND and MKE trying to put the nail in the coffin of ATA and Midwest simultaneously.

1st mistake: use RJ's that aren't a profitable aircraft.
2nd mistake: attack two airlines simultaneously.
3rd mistake: price your product UNDER your break-even point

The first 2 mistakes wouldn't be made by AirTran in this scenario. The 3rd one is one of the 2 big questions.

1. Can we still run the aircraft profitably while pricing our seats lower than Midwest?
2. Can we lure enough customers away from Midwest on those routes for long enough to force them into a financial crisis? (which would, in all likelihood, take over a year).

Personally, I think this idea sucks. Fare wars aren't usually good for ANYONE.

I agree with other posters who say pull the offer, let their stock price fall back into a realistic range, let the shareholders get REALLY pi*sed off at the MEH BOD, then come back a year or so from now and see how they're really doing with aircraft orders and profitability.

If it's a better deal then, great, we save some cash and get a good base for expansion.

If it's not, good for them; they're profitable and we're profitable. Everyone wins.

 

[Eagle757shark]

NWA is not a very good example in this case.

I was flying in that system at the time. NWA threw a bunch of RJ's that weren't profitable to begin with into both IND and MKE trying to put the nail in the coffin of ATA and Midwest simultaneously.

1st mistake: use RJ's that aren't a profitable aircraft.
2nd mistake: attack two airlines simultaneously.
3rd mistake: price your product UNDER your break-even point

The first 2 mistakes wouldn't be made by AirTran in this scenario. The 3rd one is one of the 2 big questions.

1. Can we still run the aircraft profitably while pricing our seats lower than Midwest?
2. Can we lure enough customers away from Midwest on those routes for long enough to force them into a financial crisis? (which would, in all likelihood, take over a year).

Personally, I think this idea sucks. Fare wars aren't usually good for ANYONE.

I agree with other posters who say pull the offer, let their stock price fall back into a realistic range, let the shareholders get REALLY pi*sed off at the MEH BOD, then come back a year or so from now and see how they're really doing with aircraft orders and profitability.

If it's a better deal then, great, we save some cash and get a good base for expansion.

If it's not, good for them; they're profitable and we're profitable. Everyone wins.

I'm just a pilot, but let me answer.....NO!

 

[Lear70]

No what?

No to a fare war? Sounds good to me.

No to a purchase? Sounds fine to me, too.

Like I said, I'm all in favor of just letting them do their thing, and we do our thing.

 

[Lear70]

Slight thread hijack... somehow deleted some of my phone numbers.

Can someone post or PM me the 2 or 3 cheapest hotels in ATL that aren't complete fleabags?

I have a day trip for interface and will have to stay in ATL for the first time without a crashpad.

Thanks,

 

[Jeff Helgeson]

PAX were driving to BWI long before SWA...

The same argument can made about SWA in BWI. Most people said they would not drive to BWI when you offer more destinations and better fares at DCA and IAD. Also the same was made when JBLU started at JFK. They all said that nobody would drive from the city to JFK to catch a flight to FLA when more destinations are out LGA and EWR. The question is whether they can do it profitably or not. They are going to need a feeder to make this work. 717's and 737's are not going to cut it in MKE. Airtran pilots better have a good scope in the next contract. I can easily see E-170's and E-190's out of there if this deal goes through.

PAX would make the drive to BWI for cheaper fares long before SWA started flying out of BWI. They would even drive from PA and the PHL-area for lower fares, sometimes even on the same carrier's. Example, fares on AA from BWI were usually about half the price compared to PHL.

People will drive to a farther airport if a cheaper flight is offered or a direct flight without a connection is offered, etc. If the over all price and convenience is a better value to some customers, they will drive to make those flights. Everyone has different opinions and priorities about how they will spend their money and what they will do to get from point A to point B. There is no secret formula and change is always constant. I would not be so confident in what will and will not work.

 

[stlflyguy]

Having grown up in Lake County, IL, I'll tell you that MKE is a viable choice. From mid-Lake County, you're only 90 minutes away from Mitchell. Granted ORD is 40 minutes or so, but as someone said, one line of weather and it could be tomorrow before your departure.

MKE makes sense for anyone in the North 'burbs of Chicago.

stlflyguy

 

[j41driver]

Airtran pilots better have a good scope in the next contract.

Amen!!

 

[gt1900]

Correct me if I'm wrong, but did I say anything about AAI loosing money on the routes that they match Midex on??? Nope.. Pay attention and don't read into things boys... AAI could add a couple flights on the main few routes that midex flys and still make money most likely.. I didn't say anything about AAI flying routes at a lose on purpose now did I. AAI also doesn't need to hurt Midex all that much on those routes, just enough. Midex could still make a little money but the loses on the other routes would far outweigh the few routes that make them money... Now do you understand boys??..... As far as Midex flying MCI-SEA... Yes, its stupid when you could fly MKE to SEA and have the route all to yourself and not have to compete at all with SWA.. So yes, its stupid.. And don't believe many people are gonna fly from Milwaukee to Kansas City backwards, and then Seattle.... As far as Vanguard making money on that route.. First off, they weren't in the route long enough to know, and secondly, full flights don't mean a damn thing if you don't charge enough for tickets... So I stand by what I said, MCI-SEA is stupid when they could have flown MKE-SEA all to themselves, and it wouldn't take much for AAI to severely hurt Midex... BTW.. There is no price that the the board will agree to.. AAI offered around $4 per share to the board when the shares were worth almost nothing.. Thats why AAI went to the investors.. If AAI had gone to the investors a year ago this deal would have been done overnight..