AirTran, Midwest Merger DEAD!

[whoknows]

I see your point TC, but I think if you invest in a company you would want to see that company make money and get a good return on your investment.

NWA recently mentioned that now all of Midwest fuel be added to their own fuel planing since they get a much better rates.

I really don't see NWA and Midwest as competitors anymore since NWA own a part of Midwest now.

NWA has owend all or part of Mesaba and Pinnicle at one time or another. NWA has manipulated both regional carries to help fight their war (NWA's value) and have been very welling to sacrifice the value of Pinnicle and Mesba. MEH is now a pon in a much bigger game. I hope that the employess of MEH do not get on the same ride Mesba and Pinncle have, but I think they will. I think MEH will now be whip-sawed like all the other regionals in the NWA family.

 

[Propsync]

I didn't see this coming!

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.

 

[Lear70]

But TPG Capital is not looking to cut service or employment, said Capt. Jay Schnedorf, head of the pilots union at Midwest Airlines.

"Their intent is to grow Midwest Airlines," Schnedorf said. He said TPG Capital's resources would allow Midwest Air to have more growth opportunities.

Yeah, 'cause pilot unions are ALWAYS "in the know" about what management's "big plan" is...

The level of Northwest's involvement in TPG Capital's bid will likely determine whether it gains approval from federal antitrust regulators, Hamilton said.

Yep... antitrust, here we come. I give it 50/50 odds.

Hoeksema also announced plans to reduce the number of wide, two-across seats on Midwest Airlines and add more narrow seats - boosting passenger count and revenue for those flights.

This strikes me as particularly funny in this journalistic garbage... If you want to call it journalism.

In the middle paragraphs, they use some interesting verbs to describe what AAI planned, then go on at the END of the article to quietly mention that Hoeksema plans to do the same thing. It's like watching CNN - unbiased reporting hardly even EXISTS in this country anymore.

All that aside, it's going to get interesting in MKE. I can just about guarantee you that AAI will step up the flights out of MKE to all the prime high-yield destinations. We need to flow the airplanes through somewhere, and there's no reason not to pull the gloves off now.

If the deal dies due to antitrust and no one steps up to foot NWA's part of the cash deal, we might very well be here again next year,,, with 3 more BoD members and a significantly-reduced offer.

I'm personally just glad it died (or got put off that much longer). I'm hoping the rumors of a Frontier merger (friendly, this time), are accurate. I like that route map a heck of a lot more, even though the fleet commonality isn't there.

Good luck, guys...

 

[FlyWolf]

NWA has owend all or part of Mesaba and Pinnicle at one time or another. NWA has manipulated both regional carries to help fight their war (NWA's value) and have been very welling to sacrifice the value of Pinnicle and Mesba. MEH is now a pon in a much bigger game. I hope that the employess of MEH do not get on the same ride Mesba and Pinncle have, but I think they will. I think MEH will now be whip-sawed like all the other regionals in the NWA family.

I think it depends on how much money NWA is contributing in this deal, don't forget TPG and the other parties.

I have no doubt about the uncertain future of Midwest, but isn't this part of the airline industry that we pilots have to live with anway?

 

[mnboyev]

Remember a little carrier called Champion ?... NWA went out and bought the ticket from Salt Lake City... used Champion to fight Sun Country for years... NWA 727's painted up blue and white... flying MLT flights and ball charters.... Hmmm..... This doesnt surprise me at all... good luck to all at Mid Ex... NW is gonna buy another carrier to do its fighting... Hmmm... Seen this playbook before.

All to keep Tranny out of NW territory... humorous and entertaining to watch.. How many times has NW built up MKE to only tear it down... Hopefully the DOJ looks at that..

Its never dull around the watercooler.

 

[deadstick]

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.

To anybody BUT AirTran. This gives TH 1) $16 for his own shares, 2) his cushy job and salary, 3) no more stock holders to answer to, 4) no law suit because the stockholders got a better deal than AAI. He gets his cake and eat it, too. Can they do better? Doubt it. In the service, when a commander doesn't do well, he gets replaced.

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.

TH has his parachute. Everybody at YX has a backpack.

If the deal dies due to antitrust and no one steps up to foot NWA's part of the cash deal, we might very well be here again next year,,, with 3 more BoD members and a significantly-reduced offer.

You said it. Don't you think somebody would have picked-up the phone and called DOJ for a temerature reading, first? But if this does go down in flames TH can say "It's not my fault. The government did it. I'm sorry AAI is only offering $10/share, now."

 

[TV9Driver]

unfortunately, this will end badly for MEH in the next 2-3 years. anytime you are controlled by a person/company that has spent time and money trying to put you out of business, it's not a good situation.

i also think this is bad for AAI - we need to find something else soon for our growth plans or we will be selling off 737 slots. Frontier would be great. Right now Joe L. and Bob F. are 0-2 on mergers in the last 3 years......

 

[Schwanker]

I hate to be a pessimist here, but you're now owned by money-men and an airline that wanted to see you gone a long time ago.

I don't have much hope for the MEH people. Sorry. Good luck. TC

You really think they wanted them gone? If that were the case, they'd been gone long ago. NWA wanted MEH in place exactly for the reason that just played out, keep out the larger competition.

Schwanker

 

[roughneck]

I think there is a high probablity that AirTran will be bought by SWA.

 

[PCL_128]

I fear that the MEH guys will soon learn the hard way what it's really like to have anything to do with Northwest Airlines. Good luck.

 

[Lear70]

I think there is a high probablity that AirTran will be bought by SWA.

No, no, no, you've got it all backwards.

AAI is going to be purchased by Champion with NWA money.

All our 737's will then go to Southwest and the 717's will replace the 727's for all the charters.

The 727's will go back in service with "white glove treatment" into the MEH system, including the cookie ovens. THAT'S the super-secret growth plan. Now you know!

Wonder if I could bid over? To the 727 of course... Automation is for wimps.

 

[Toecutter]

we are all owned by money-men. again nwa is a minority shareholder. you're telling me that after spending $400 million in cash TPG just wants MEH to go away?

NOt sure? WHy don't you ask Frank Lorenzo. Standard corporate raider playbook. 1. Break the unions 2. upsteam profits into a holding company. 3. sell off assets. 4. declare bankruptcy and make off with the loot.

 

[deadstick]

Did I miss something?

This is from MarketWatch:

SAN FRANCISCO (MarketWatch) --

... A 4.4% rally in the shares of Mesa Air Group (MEH ) helped lift the larger Dow Jones Wilshire Airlines index 0.9%. Over the weekend, Mesa Air agreed to an all-cash offer of $16 a share from TPG Capital, shunning a hostile proposal from AirTran Holdings.

 

[ultrarunner]

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.

They didn't prop. AAI forced Midex to sell. If Midex had NOT lined up a buyer at 16 bucks, when AAI offer expired, MEH stock would have tanked back to 8 or 8 bucks, or even lower.

THAT would have caused all kinds of problems for MEH. They essentially HAD to find a buyer.

 

[fam62c]

Why didn't TPG just do this alone?

I'm a little confused by this whole deal. IF TPG sees enough hidden or future value to get it's 16/share plus a high ROI back from Midwest at some point why would it get NWA involved in this deal? Personally, I don't see how TPG is going to get it's money back but these people are smart so they must have an exit strategy. I can guarantee that a lot of MEH cash will find it's way into the pockets of TPG in the form of "fees." I can also guarantee that MEH will be loaded up with as much debt as it can possibly handle to pay for any growth that will happen to make the company look better for a future sale. TPG buys companies and sells them to the public or another company at a profit......it's just what private equity does. In this case there must be something I'm not seeing because I sure don't see MEH being a good value at 16/share. I also think that the airline industry a risky place for investment because there are so many factors that can't be controlled.

There's a chance that what TGP is really doing here is essentially acting as a broker for a sale of MEH to NWA. TPG takes MEH private to thwart AAI and get the stockholders out of the picture. As time goes by NWA slowly buys out TPG (at a nice profit for TPG) or buys selected MEH MKE assets (thus avoiding a merger) from TGP. TGP would continue to collect cash from MEH while this is happening in the form of management and deal-making fees. TGP could use MEH debt (and proceeds from selling stuff to NWA) to fund expansion of the MCI hub and once NWA has taken what they want from the MKE operation they do an IPO of the MEH certificate and operation as a MCI based carrier. Everybody walks away with what they want: TPG gets it's money back and a nice ROI, NWA gets rid of a competitor once and for all and prevents a MKE LCC hub. I think that if the asset sales are done gradually enough there won't be any antitrust issues. MKE, unfortunately loses out as the hub eventually is cherry-picked of the best routes and slots for NWA mainline and everything else is done on NWA affiliate RJ's. Think STL after AMR bought out TWA.

This is all speculation but I smell a rat in the form of the NWA investment. If this was 100% TPG I would still wonder why they were buying MEH because I don't see the "hidden value" here but there would be a chance that TPG would clean up MEH and use MEH debt to grow the company for another IPO. With NWA buying in I just don't see the incentive to grow MEH in MKE even if NWA has a stake.

I also wonder about the future roles of Skyway and Skywest. TGP will be buying Skyway when they buy MEH and Skyway has a terrible fleet and operation problems that make it a drag on earnings. I don't see Skyway and Skywest both staying around......either Skyway needs a major investment to make it viable or it needs to be killed off with Skywest left to do all the work. On another subject, I'm amazed that the MEH MEC Chairman went public with his comments. If he believes what TGP is telling him he could end up looking like a fool. Once this deal is done and MEH is private there will be huge pressure for MEH to "pay" TPG back. Good luck to the Midwest MEC on their next contract.....they're going to need it.

 

[Schwanker]

southwest loaned ATA money, which is completely different than here. northwest is a minority stakeholder. i was speaking of when ATA grew in the mid to late 90's.

we shall see...

What's your definition of a minority shareholder? Don't be surprised if NWA put up the vast majority of the $$ in this deal. The level of NWA's investment has not been disclosed. I think "passive investor" is a better description. How passive is yet to be seen, although I don't think you'll see much in the immediate future.

 

[Schwanker]

I'm a little confused by this whole deal. IF TPG sees enough hidden or future value to get it's 16/share plus a high ROI back from Midwest at some point why would it get NWA involved in this deal? Personally, I don't see how TPG is going to get it's money back but these people are smart so they must have an exit strategy. I can guarantee that a lot of MEH cash will find it's way into the pockets of TPG in the form of "fees." I can also guarantee that MEH will be loaded up with as much debt as it can possibly handle to pay for any growth that will happen to make the company look better for a future sale. TPG buys companies and sells them to the public or another company at a profit......it's just what private equity does. In this case there must be something I'm not seeing because I sure don't see MEH being a good value at 16/share. I also think that the airline industry a risky place for investment because there are so many factors that can't be controlled.

There's a chance that what TGP is really doing here is essentially acting as a broker for a sale of MEH to NWA. TPG takes MEH private to thwart AAI and get the stockholders out of the picture. As time goes by NWA slowly buys out TPG (at a nice profit for TPG) or buys selected MEH MKE assets (thus avoiding a merger) from TGP. TGP would continue to collect cash from MEH while this is happening in the form of management and deal-making fees. TGP could use MEH debt (and proceeds from selling stuff to NWA) to fund expansion of the MCI hub and once NWA has taken what they want from the MKE operation they do an IPO of the MEH certificate and operation as a MCI based carrier. Everybody walks away with what they want: TPG gets it's money back and a nice ROI, NWA gets rid of a competitor once and for all and prevents a MKE LCC hub. I think that if the asset sales are done gradually enough there won't be any antitrust issues. MKE, unfortunately loses out as the hub eventually is cherry-picked of the best routes and slots for NWA mainline and everything else is done on NWA affiliate RJ's. Think STL after AMR bought out TWA.

This is all speculation but I smell a rat in the form of the NWA investment. If this was 100% TPG I would still wonder why they were buying MEH because I don't see the "hidden value" here but there would be a chance that TPG would clean up MEH and use MEH debt to grow the company for another IPO. With NWA buying in I just don't see the incentive to grow MEH in MKE even if NWA has a stake.

I also wonder about the future roles of Skyway and Skywest. TGP will be buying Skyway when they buy MEH and Skyway has a terrible fleet and operation problems that make it a drag on earnings. I don't see Skyway and Skywest both staying around......either Skyway needs a major investment to make it viable or it needs to be killed off with Skywest left to do all the work. On another subject, I'm amazed that the MEH MEC Chairman went public with his comments. If he believes what TGP is telling him he could end up looking like a fool. Once this deal is done and MEH is private there will be huge pressure for MEH to "pay" TPG back. Good luck to the Midwest MEC on their next contract.....they're going to need it.

You're correct. I believe TPG is a broker for NWA. I would venture to guess TPG has less $ into this than NWA.

Have you ever heard of Bonderman?

 

[lowecur]

What's your definition of a minority shareholder? Don't be surprised if NWA put up the vast majority of the $$ in this deal. No, TPG can only get dominant control with at least 51%. There are a few other minority investors other than NWA. The level of NWA's investment has not been disclosed. AAI has spys on the board, and they know what NWA's investment is. I think "passive investor" is a better description. How passive is yet to be seen, although I don't think you'll see much in the immediate future.

Lot's of scenerios can play off this move.

• TPG can go after AAI down the road when their stock price is lower(that's the synergy for making money). AAI stock price could shrink by 33% in the next 6 months as economy faulters (good time for TPG to make offer).
• TPG has a backdoor agreement with NWA that will benefit TPG at some pt in the future for stonewalling an AAI/MEH deal.
• No way this deal was put together for a SWA/AAI merger. That would hurt TPG/MEH/NWA.

imp:​

 

[Schwanker]

Lowcur,
TPG's stake may be fully or partially financed by a "passive" investor. It doesn't necessarily come out of pocket. Just a thought.

Schwanker

 

[Coloaviator]

Some have said Skywest would have first right or refusal to purchase Midwest. The rumor that Skywest is purchasing Midwest is heating up. They have to spend their billion in cash on something, maybe this is what they have been saving it for. This (MKE) would be a place where they wouldn't step on the toes of United or Delta either.