Eagle757shark
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AirTran-Midwest deal is 'doomed,' analyst says
But carrier's shares rise on improved outlook
By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 03/21/07
AirTran Airways' planned takeover of Midwest Airlines is "ultimately doomed to fail," said an industry analyst who nevertheless raised his profit projections, helping boost AirTran shares.
In a report Wednesday, JP Morgan analyst Jamie Baker said AirTran doesn't have a track record for completing acquisitions and will "simply walk away" by May or June.
"We question the feasibility of hostile transactions, particularly in this industry," said Baker. "It sure didn't work for US Airways and Wisconsin law gives Midwest a nearly bullet-proof anti-takeover defense."
Still, AirTran's shares surged 10 percent Wednesday after Baker raised his 2007 earnings estimate. Also, the discount carrier's financial chief said its first-quarter loss would be less than expected, Bloomberg News reported.
AirTran's share price rose $1 to $11.04.
Baker revised his full-year 2007 profit projection for AirTran from 55 cents a share to 90 cents a share, noting that AirTran said it plans to temporarily halt aircraft deliveries this summer. Baker said capacity cutbacks by rival Delta Air Lines in Atlanta and other key markets will also help AirTran to command higher fares and revenues than expected.
AirTran launched the Midwest bid via a tender offer to its shareholders after being rebuffed by Midwest management and its board. It recently extended the offer into next month. AirTran executives say the combined airline would be a powerful national player and that they will pursue the deal for as long as it takes.
But carrier's shares rise on improved outlook
By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 03/21/07
AirTran Airways' planned takeover of Midwest Airlines is "ultimately doomed to fail," said an industry analyst who nevertheless raised his profit projections, helping boost AirTran shares.
In a report Wednesday, JP Morgan analyst Jamie Baker said AirTran doesn't have a track record for completing acquisitions and will "simply walk away" by May or June.
"We question the feasibility of hostile transactions, particularly in this industry," said Baker. "It sure didn't work for US Airways and Wisconsin law gives Midwest a nearly bullet-proof anti-takeover defense."
Still, AirTran's shares surged 10 percent Wednesday after Baker raised his 2007 earnings estimate. Also, the discount carrier's financial chief said its first-quarter loss would be less than expected, Bloomberg News reported.
AirTran's share price rose $1 to $11.04.
Baker revised his full-year 2007 profit projection for AirTran from 55 cents a share to 90 cents a share, noting that AirTran said it plans to temporarily halt aircraft deliveries this summer. Baker said capacity cutbacks by rival Delta Air Lines in Atlanta and other key markets will also help AirTran to command higher fares and revenues than expected.
AirTran launched the Midwest bid via a tender offer to its shareholders after being rebuffed by Midwest management and its board. It recently extended the offer into next month. AirTran executives say the combined airline would be a powerful national player and that they will pursue the deal for as long as it takes.
