AirTran/Midwest deal article

[-9Capt]

Octavian funds would support a higher offer for Midwest Air



NEW YORK (MarketWatch) - Octavian Master Fund and its affiliates, which own about 5% of the shares of Midwest Air Group Inc. said in a federal filing they supported the regional airline's resistance to a takeover offer from AirTran Holdings Inc. but would support a merger under "the right terms." If AirTran raises its roughly $318 million cash-and-stock offer, extended until April 11, "we would strongly encourage and expect the board and management team of Midwest to abide by their fiduciary duties and immediately enter into good faith negotiations to effectuate a transaction," according to Octavian's filing.

 

[Eagle757shark]

An indication to AirTran that the deal is all about price. I've been wondering all along what would be the magic number to engage the management team at Midwest. It seems Octavian is throwing out the bait, now will AirTran bite with a higher offer. Considering that only 7% of the stock has been tendered to AirTran, could mean the other shareholders feel the same way as Octavian. The next few months should be interesting.

 

[Eagle757shark]

Investors: AirTran should boost Midwest offer

By DAVE HIRSCHMAN
The Atlanta Journal-Constitution
Published on: 03/26/07
A New York hedge fund that owns more than 5 percent of Midwest Airlines stock is encouraging the company to seriously consider a merger with AirTran Airways if the discount carrier increases its offer.
AirTran launched a hostile bid for Midwest in December, offering $345 million in a cash and stock deal. But Midwest has consistently rebuffed AirTran and called its most recent offer of $13.25 a share "inadequate and opportunistic."

In a letter to Midwest's board released Monday, Richard Hurowitz, chief executive of Octavian Advisors, encouraged Midwest directors to carefully consider a merger if AirTran ups its price.
"Octavian does not currently believe that the AirTran proposal reflects the full value of Midwest," Hurowitz said. "We do believe, however, that under the right terms a combination fo the two companies makes enormous strategic sense . . .
"In the event AirTran were to materially increase its offer for Midwest . . . we would strongly encourage and expect the board and management team of Midwest to abide by their fiduciary duties and immediately enter into good faith negotiations to effectuate a transaction."
An AirTran tender offer, made directly to shareholders after management rebuffed a merger, as gotten a cool reception. About 7.4 percent of Midwest shareholders have agreed to sell their shares. The current offer expires April 11 and can be renewed indefinitely.
AirTran also is seeking to install three of its own candidates on Midwest's 12-member board at the airline's next annual meeting, but no meeting date has been set.
Carol Skornicka, Midwest's general counsel, said Octavian's position supports the Milwaukee-based carrier's contention that AirTran's offer is too low.
"All the investors agree that the current offer is inadequate," she said. "That's what Octavian seems to be saying as well."

 

[c9skytrain]

If I owned 5% of Midwest stock, I would encourage AAI to up the offer also.

 

[ultrarunner]

If I owned 5% of Midwest stock, I would encourage AAI to up the offer also.

No $hit. Everyone has their price. This deal will happen eventually.

 

[Steeler Fan]

I talked to a Midwest Capt (17 yrs seniority) 2 days ago. He said he heard that the deal is dead, and the come 1 April, Midwest is announcing a purchase order for Airbuses (or is it Airbi?). In other words, nobody on our level will really know until it happens. We'll probably find out on Flightinfo first, though.



My reaction too was this was all about offering the "right price". I'm sure most of us just want to know what's going to happen, especially those who are waiting to upgrade soon.

 

[Joey Bayonne]

and the come 1 April, Midwest is announcing a purchase order for Airbuses (or is it Airbi?).

So let's see then, Midwest will be flying Airbus, MD-80(8)'s, B717's as well as B1900's and 328Jets through Skway. Good Luck with all of that!

Sounds like a bluff to me but what do I know? Whatever happens I just hope it is equitable for both sides...

 

[Eagle757shark]

I talked to a Midwest Capt (17 yrs seniority) 2 days ago. He said he heard that the deal is dead, and the come 1 April, Midwest is announcing a purchase order for Airbuses (or is it Airbi?). In other words, nobody on our level will really know until it happens. We'll probably find out on Flightinfo first, though.



My reaction too was this was all about offering the "right price". I'm sure most of us just want to know what's going to happen, especially those who are waiting to upgrade soon.

Midwest Capt with 17 years seniority said the deal is dead. Sounds like the infamous "IT"S A DONE DEAL" so often quoted in this industry. Do I know what is going to happen, NO! Does this Captain, NO! I will say though it will all come down to AirTran and the shareholders at Midwest. Even the Midwest spokeswoman in this article hints that it all comes down to price. If AirTran ups the offer to what the shareholders find favorable, there may be a deal. Time will tell, just waiting to see how it all plays out.

 

[metroplex]

it was always about price. AAI just has not much more to offer or they believe MEH is not more worth...80s and B1900 are going away, so the mix will be 717, maybe Airbus and 328Jet on the connect side.

 

[Flash]

I talked to a Midwest Capt (17 yrs seniority) 2 days ago. He said he heard that the deal is dead, and the come 1 April, Midwest is announcing a purchase order for Airbuses (or is it Airbi?). In other words, nobody on our level will really know until it happens. We'll probably find out on Flightinfo first, though.


I think the date he gave you might have something to do with an announcement like this, but maybe it's just a coinkidink

 

[FlyWolf]

I talked to a Midwest Capt (17 yrs seniority) 2 days ago. He said he heard that the deal is dead, and the come 1 April, Midwest is announcing a purchase order for Airbuses (or is it Airbi?). In other words, nobody on our level will really know until it happens. We'll probably find out on Flightinfo first, though.



My reaction too was this was all about offering the "right price". I'm sure most of us just want to know what's going to happen, especially those who are waiting to upgrade soon.

Could it be April's fool?

 

[FlyWolf]

How the heck does any one know what will happen in this deal ? 17 year capt seniority or not. As someone said its all up to the shareholders.

 

[AFcitrus]

This comment is by Octavian is the dumbest comment I've ever heard. These guys are Master's of the obvious (see also John Madden).

Of course they'd suggest the board "seriously" consider the offer if the price were "materially" higher. It's about money now just like it has always been. It has nothing to do with this "home town pride and Best care in the Air" BS. The problem is, and will continue to be, that based on public information about Midwest neither AirTran management nor industry analysts think Midwest is worth more than the current offer.

AAI has always said that if Midwest opens their books and proves to AAI that the company is, in fact, worth more money then AAI would consider a higher offer. But until then AAI is smartly holding their cards close.

How many of you would pay asking price for a house without seeing the inside first? There could be a lot of damage inside that dwelling that the owner is trying to hide and sell to some sucker who has more money than sense.

What Octavian should be saying is "Based on what we know through proprietary information, the offer is too low. However, we recommend the Midwest Board enter into negotiations with AAI and show them some proof as to why we believe the company is worth more than the 89% premium over the previous 6 month average that AAI is offering." Unless, of course, the board is trying to sell a damaged house to some sucker who has more money than sense.

If that's the case- you won't find that sucker at AAI headquarters. We'll move on to plan B.

 

[Citrusflyer]

Check Octavian's SEC filings. They own over a million shares purchased over $13 a share. Sounds like someone trying to save their collective you know what.....................

 

[Steeler Fan]

Could it be April's fool?

Shame on me!

 

[DougCorp-9]

I say we pull the plug, watch the stock go back down to 8 or 9 bucks, add capacity on their top five routes and have a fare sale. Then we can watch Tim's "Strategic Plan" in action. What a joke.

 

[Lear70]

We already did that... or at least partially.

New fare sale went up today, $39 per leg, some of the routes overlap some MEH routes.

How the hell we make money off that, I have NO idea...

 

[RIDETHELIGHTING]

We already did that... or at least partially.

New fare sale went up today, $39 per leg, some of the routes overlap some MEH routes.

How the hell we make money off that, I have NO idea...

Cause they only sell so many seats at that price, which isnt many. SWA has been doing it for years.

 

[pit717]

it isnt about us making money on their routes....its about them losing ....and we can afford to lose money alot longer than they can....i say we pull the offer and flood mke with flights .....screw all these people...give them more money my a$$.....if their worth 345 million with 35 airplanes and 12 gates in mke..that would make us worth 400 billion with 140 airplanes.....which just isnt the case......pull the offer the stock price will drop...

 

[FlyWolf]

I say we pull the plug, watch the stock go back down to 8 or 9 bucks, add capacity on their top five routes and have a fare sale. Then we can watch Tim's "Strategic Plan" in action. What a joke.

Don't you think if airTran thought that what you'r taking about would work they would have tried it by now? why do you think that airTran is insisting on make this deal happen? I say your ideas are bad. I agree what a joke.

 

[FlyWolf]

it isnt about us making money on their routes....its about them losing ....and we can afford to lose money alot longer than they can....i say we pull the offer and flood mke with flights .....screw all these people...give them more money my a$$.....if their worth 345 million with 35 airplanes and 12 gates in mke..that would make us worth 400 billion with 140 airplanes.....which just isnt the case......pull the offer the stock price will drop...

^^^^^ Scary, my God, what a mentality.

 

[Steeler Fan]

Wolf, in terms of our reaction to the Midwest pilots themselves, most here were completely on board with a relative seniority merger with fences to protect the upgrade projections for our F/Os. A good friend of mine is an MD-80 F/O for you, and he was pretty optimistic about his future at a combined airline.

It was a shock to see that your MEC decided not to stay neutral. That probably wasn't the reason for the hostility that you now see on the forum (but it sure didn't help). That, in and of itself, raised some eyebrows around here with me and my friends as well, so if you can explain your MEC's rationale on that, I'll listen (and promise to keep an open mind).

I think that our guys are tired of hearing your management/PR machine slamming us for being an inferior airline. It's like this, you can insult your sister all day, but if someone else starts, well that's a different story. Our guys are probably thinking that if we keep reading about how cr@ppy you think our airline is, and how well you can do without us, then have at it.

Personally, I just want to know, either way, so that we can move forward, either together or as separate entities.

Go Steelers!

 

[UAL'01]

Last I checked airlines are in business to make money, not to put other airlines out of business. That whole concept didn't work well for DAL with AirTran. Why would anybody think it would work for AirTran against Midwest. Southwest could pull the same thing on AirTran ( or anybody else for that matter). But at least SW is in business to make money and they rarely loose sight of that fact. Let's keep that in mind for AirTran as well. If the merger does go through, we all have to work together at some point.
Good luck to all. And if it does get done, lets hope we are all peed off equally...

 

[mnboyev]

I say get it done...I just want the dam cookies...mmmm.... In the end it would be good for both carriers..employees..and pax...

 

[FlyWolf]

It was a shock to see that your MEC decided not to stay neutral. That probably wasn't the reason for the hostility that you now see on the forum (but it sure didn't help). That, in and of itself, raised some eyebrows around here with me and my friends as well, so if you can explain your MEC's rationale on that, I'll listen (and promise to keep an open mind).

Go Steelers!

Steeler fan, Its pure and simple, $$$$$$$$

Alpa knows very well if we merge ALPA will be no more, they don't want to loose the pilot dues. It seems like everyone is only looking after the money, no one cares that much about me or you "the laborers"

Our management PR, thats just it "PR", every corporation in the US uses some kins of PR to better their position, and our guys are no different.

As you said about your friend here at Midwest, quite a few pilots (Capt's and FO's) are for the merger, but comments like pit717 above alienate that group of people.

 

[SkiFishFly]

it isnt about us making money on their routes....its about them losing ....and we can afford to lose money alot longer than they can....i say we pull the offer and flood mke with flights .....screw all these people...give them more money my a$$.....if their worth 345 million with 35 airplanes and 12 gates in mke..that would make us worth 400 billion with 140 airplanes.....which just isnt the case......pull the offer the stock price will drop...

Bad Idea. We need to focus on profit. Look where this kind of thinking has gotten Delta and NWA.

 

[FlyWolf]

Last I checked airlines are in business to make money, not to put other airlines out of business. That whole concept didn't work well for DAL with AirTran. Why would anybody think it would work for AirTran against Midwest. Southwest could pull the same thing on AirTran ( or anybody else for that matter). But at least SW is in business to make money and they rarely loose sight of that fact. Let's keep that in mind for AirTran as well. If the merger does go through, we all have to work together at some point.
Good luck to all. And if it does get done, lets hope we are all peed off equally...

Well said UAL01

 

[SkiFishFly]

Last I checked airlines are in business to make money, not to put other airlines out of business. That whole concept didn't work well for DAL with AirTran. Why would anybody think it would work for AirTran against Midwest. Southwest could pull the same thing on AirTran ( or anybody else for that matter). But at least SW is in business to make money and they rarely loose sight of that fact. Let's keep that in mind for AirTran as well. If the merger does go through, we all have to work together at some point.
Good luck to all. And if it does get done, lets hope we are all peed off equally...

I'm with you. SWA never seems to lose sight of the fact that they are in business to make money for the company and the employees.

 

[DCitrus9]

UAL'01 is spot on. Losing money to attack another carrier is stupid. Price the product so you can make money (and pay your pilots properly!).

 

[SkiFishFly]

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.