AirTran, Midwest Merger DEAD!

[Occam's Razor]

Simple...it's called "taking up space with a cripple"

Ask yourself this: Is NWA better off with Spirit in DTW than more SWA?

Is NWA better off with Sun Country in MSP than SWA?

Is NWA better off with Midwest in MKE than AirTran?

I'd say the answer is yes on all counts. Each one of these "low intensity" competitors takes up space and dilutes the market to the point where adding another competitor to the mix loses money for EVERYONE. Far better to have one of these outfits than an truly agressive competitor

I'd say that over the course of 5 years, NWA will make back their investment in spades from protected yields. Not just to/from MKE, but rather all of the connecting traffic that may have used AT to connect through MKE versus NWA in the midwest.

The whole "a midwest company for midwesterners" plays VERY well in that part of the country, too. Gives them political cover and gives JL the big fat finger to boot.

Brilliant move by NWA, IMHO. $140 mil is chump change, and if they get any additional return on their investment, it will be found money.

Well played.

Nu

You are wise beyond your years, Grasshopper!

 

[CitationLover]

Simple...it's called "taking up space with a cripple"

Ask yourself this: Is NWA better off with Spirit in DTW than more SWA?

Is NWA better off with Sun Country in MSP than SWA?

Is NWA better off with Midwest in MKE than AirTran?

I'd say the answer is yes on all counts. Each one of these "low intensity" competitors takes up space and dilutes the market to the point where adding another competitor to the mix loses money for EVERYONE. Far better to have one of these outfits than an truly agressive competitor

I'd say that over the course of 5 years, NWA will make back their investment in spades from protected yields. Not just to/from MKE, but rather all of the connecting traffic that may have used AT to connect through MKE versus NWA in the midwest.

The whole "a midwest company for midwesterners" plays VERY well in that part of the country, too. Gives them political cover and gives JL the big fat finger to boot.

Brilliant move by NWA, IMHO. $140 mil is chump change, and if they get any additional return on their investment, it will be found money.

Well played.

Nu

excellent points. these "investments" are perhaps insurance policies that pay dividends (code share revenue).

 

[Captzaahlie]

Northwest's passive investment has anti-trust written all over it. They will be forced to back out of any participation as will any other large legacy carrier that is dominant in the MEH domain.

AAI should just sit tight. TPG may bow out without financial support from someone else other than a carrier that has something to gain from this. AAI could end up buying it for half of their last offer in a year or two if TPG goes it alone, as I doubt TPG will be able to grow their investment in the coming troubled financial arena.

imp:​

You are still around?

I was sorta hoping you got trapped in a mine shaft somewhere .

Nothing personal......

 

[IdRtherBsailing]

Wow. A lot of interesting ideas. Here's what I get out of it.

1. I thought Midwest didn't want to sell. To anybody. If anybody thought a low-cost airline couldn't run Midwest, what about a company that only INVESTS in an airline? Just because the offer changes to all cash means Midwest has to sell? What a bunch of crap. What happened to saving the cookie? Do you really think this current management can run Midwest better with more money? They'll be twice as many people sitting around HQ and the Best Care Campus having no clue what their job is if you asked them. That's what happened the last time these jokers were making money.

2. Northwest. What a wild card. Lots of ideas here and ANYTHING could happen. They could turn MKE into an alternate airport if they wanted to. Where I believe AirTran would have kept almost everyone, Northwest could easily say 'Gut it like a fish'.

3. Timing. AirTran was pursuing this for almost a year. These guys show up in a week and a deal is ready to go? WTF? Shouldn't Midwest be having meetings, and meetings of meetings, and focus groups, and meetings for meetings and focus groups? Normally they take months just to decide on a conference room. Just because there's more money on the table means these guys can do it better?

I guess all I can say is good luck to the employees. You're going to need it now. Management has sold you out to unknown puppets with Northwest pulling the strings.

What makes you think this was just thrown together over the weekend? I have been hearing rumors of Northwests being a possible player for a few months now. I think this was in the works for a while.

 

[Captzaahlie]

Just for the record .....

No insensitivity was meant or implied to those poor guys in Utah. Hopefully they will be found safe and sound in the very near future.

Lowecur would not feel loved if someone didn't take a play full jab at him from time to time.

Lowecur, you really think AAI stock will drop?

I'm thinking now is a good time to buy it......

 

[instructordude]

Had a Midwest guy on our jumpseat today and all I can say was he was one happy camper. I really didn't know what to say.

 

[deadstick]

WHEN DO THEY START TO INTERVIEW HERE???????

http://www.youtube.com/watch?v=JxHB9pjESxY

That's the new Airbus interior for Midwest. They just got some deep pockets.

Oh yea. They are hiring. :beer:

 

[fam62c]

I guess I can understand the NWA "insurance" investment value here for their part of the deal but I still want to know how TPG gets their profit out of this deal. They need to get their initial investment back plus any additional capital they put into MEH plus their profit. If they grow Midwest to make it attractive to a buyer they need to sell it to get their investment back out and we are right where we started with a public MEH that could be taken over by someone and cause a problem for NWA. The way I see it TPG has to sell the company to someone at some point to get their cash back, it would have to be NWA I guess. In any case, I guess after all of this AAI didn't really want MEH that badly anyway. It looks like MEH was actually more valuable to NWA all along.

 

[CitationLover]

I guess I can understand the NWA "insurance" investment value here for their part of the deal but I still want to know how TPG gets their profit out of this deal. They need to get their initial investment back plus any additional capital they put into MEH plus their profit. If they grow Midwest to make it attractive to a buyer they need to sell it to get their investment back out and we are right where we started with a public MEH that could be taken over by someone and cause a problem for NWA. The way I see it TPG has to sell the company to someone at some point to get their cash back, it would have to be NWA I guess. In any case, I guess after all of this AAI didn't really want MEH that badly anyway. It looks like MEH was actually more valuable to NWA all along.

they don't have to sell anything. they can simply recapitalize MEH on the market and sell shares. look how much CAL made on the expressjet IPO.

 

[hyperboy]

Cl

You go citation lover...your my hero!

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