AirTran, Midwest Merger DEAD!

[FlyWolf]

Why would NWA be involved in a deal that would further grow a low-cost competitor in its backyard?

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.

 

[CitationLover]

to me this is the important part of the statement:

http://www.marketwatch.com/news/sto...x?guid={F4B4EAA0-65CC-47D2-9BE4-1F216AFCF2F3}

It said it and Midwest would maintain their code-sharing accord and would explore ways to cut costs, like jointly purchasing jet fuel.

if fuel keeps going up and up in price, expect a lot more airlines to go into together and purchase it. with the larger numbers you should have more purchasing power and thus hopefully can command a better price.

 

[MSNFlier]

all about the $ & JLo's real motivation?

As much as I hate to admit it, I think the MEH BOD was right. The value of the company was much greater than AAI's offer. The BOD, it appears, did act in the best interests of the shareholders. 16 cash is a whole lot better than 11 and change (only half of which was cash).

Now, as to NWA, if they're a minority stakeholder in this deal, there won't be any anti-trust issues as long as their involvement in MEH is similar to their current marketing agreements, etc. In fact, if you compared fares from MKE today in the markets where NWA and MEH directly compete I think you will find that on many of those routes MEH's fares , or both MEH's and NWA's fares, are relatively high already.

IMHO, I think AAI's offer was more about growing AAI cheaply (even at 15.75 - 1/2 = 7.875/share). JLo would get 25 717s and their pilots, parts/spares, and mechanics that knew the aircraft. Everything else would have immediately been on the block. So, what would the cost of the 717s been per plane? I think that's where this deal was most valuable for JLo. JLo wanted to grow capacity at that cost vs. continuing to buy 737s and hiring and training more new pilots. Didn't AAI just delay delivery of some 737s?

Ultimately, JLo couldn't afford the deal. One total guess, btw, is that NWA's participation was right at the end in goosing the price from 15.75 to 16 and sealing the deal, thereby hosing JLo.

Well, it appears it's over. Good luck to everyone. We shall see....

 

[deadstick]

I have to disagree, TPG won't allow that, TPG have a history of turning companies into money making, very successful companies.

Now that the new owner have much deeper pockets and better financial ratings, we will be able to get the aircrafts we need to replace the 80's much sooner.

The union have met with TPG last week, and they are very happy hearing TPG's plans for Midwest.

Very exciting times ahead.

I sure hope you are right.

I am thinking along the lines of AA717driver. I know about the CAL/NWA thing, but MKE is in NWA's back yard. I think the Airbus deal is moving ahead, although with the AirTran deal dead, any chance to go back to the 737? Naah. Probably not.

One thing that hasn't been mentioned is SkyWest vs. Skyway. All the growth is SkyWest with that 15 option on 25 aircraft. There was talk of growth on the MC side, but where?

 

[On Your Six]

Thanks for the support TC. I would imagine it is no different than NWA's strategic alliance with Continental (that is a lot more antitrust than little ole' MEH), after all Continental can hurt NWA's bottom line A LOT more than MEH could ever through international competition.

"Explosive" growth for MEH would be an additional 7 airplanes, nothing that can hurt NWA. In fact we already do not fly on any NWA routes when we pulled out of DTW.

Private equity firms always look to IPO their investment (or sell it outright) a few years down the line. To do that, the invesmtent has to be improved considerably for it to attract attention - boosting the bottom line either through cost cutting or increased revenue generation.

So, in this day of low-cost blood letting and insane airfare wars to capture market share, can someone shed any light on how Midwest will be improved THAT MUCH MORE in the near term? Midwest airplanes do not resemble those of comparable carriers - the small number of all leather, comfy seats are completely unique. Clearly NWA doesn't want to make it stronger so that it can pull business away from DTW or MSP. Changing aircraft interiors to accomodate more passengers (volume) would wreck the unique culture and value proposition for a high percentage of passengers.

How can TPG/NWA get the ROI they expect without hurting NWA's competitive position in that part of the country or by using Midwest's current fleet with their unique, low-cabin volume interiors? I am betting that you can expect increased competition from Air Tran and other LCCs. Cost-cutting and the selling of core assets (replace Skyway with Compass?) would be one plausible idea if you can't generate much more revenue on existing assets. I guess the cookie ovens will be the first to go... Too bad becasue the Air Tran offer made a lot more strategic sense given their route structures were complementary vs. overlapping with NWA...

I wonder if Air Tran has approached private equity firms as well?

 

[deadstick]

How can TPG/NWA get the ROI they expect without hurting NWA's competitive position in that part of the country or by using Midwest's current fleet with their unique, low-cabin volume interiors? I am betting that you can expect increased competition from Air Tran and other LCCs. Cost-cutting and the selling of core assets (replace Skyway with Compass?) would be one plausible idea if you can't generate much more revenue on existing assets. I guess the cookie ovens will be the first to go... Too bad becasue the Air Tran offer made a lot more strategic sense given their route structures were complementary vs. overlapping with NWA...
quote]

What about NWA backing off on the Midwest routes so they can use those aircraft/crews to make-up for the route cuts made over the last few months? Or was all of that to be made up with the new labor agreement? It's a stretch, but just a thought.

 

[Occam's Razor]

What about NWA backing off on the Midwest routes so they can use those aircraft/crews to make-up for the route cuts made over the last few months? Or was all of that to be made up with the new labor agreement? It's a stretch, but just a thought.

Got Scope?

There will be no code-share or joint venture without the approval of NWA pilots.

See: Section 1

 

[~~~^~~~]

What about the overlap with Compass? Wonder about SkyWest's role....

 

[atafan]

Looks like NWA is playing from the same play book SWA used to shoot down JL.

Ask the folks at ATA how much they grew when Southwest was initially calling the shots. When Southwest outbid AirTran for the gates at Midway, Southwest shut down every competing route they had with ATA. The only routes ATA were left with out of Midway were the cities Southwest didn't serve.....(LGA,DCA, and BOS).

True statement. Ask me how it is living under someone's thumb just waiting for the next shoe to drop. I don't expect great things to happen for Midwest. But let's not forget what's important here.

How have the suits benefited from this deal, that's all that's important. RIGHT!

 

[Yuppyguppy]

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

Nothing like the pot calling the kettle black.