Another bid to buy Midwest Airlines?

[FlyWolf]

I still think that the combination makes sense but It will be very tough to get done if the MEH brass won't go willingly and I'm afraid they would take death over Airtran.

fam62c, its all about money, anything for sale if you pay the right price

 

[Lear70]

(Leonard) says AirTran would add flights from Mitchell International Airport, and bring lower fares for passengers flying from Milwaukee.

Hoeksema is dubious of those claims, questioning whether Milwaukee can sustain a major expansion.

He says Midwest's growth plan, which includes a regional jet service that launches in April, provides Midwest with a "significantly higher" value than the AirTran offer.​

Wait a second, Hoeksema. Which one is it? YOU are launching RJ service from your hub but question whether your hub can sustain a major expansion?

Who the h*ll wrote this article anyway? Every other paragraph is one "expert" contradicting another.

What a bunch of rubbish.

Meanwhile, Goldman Sachs is working up a detailed study of Midwest, including an updated valuation of the airline and strategic options to help Midwest maximize shareholder value, said Carol Skornicka, Midwest senior vice president of corporate affairs.

"It's too early to say what might happen once that process is completed", she said. "I think everybody recognizes something is going to happen; we just don't know what."

That's about the only thing there is to say about this. Nothing new here...

(Spelling, sentence structure, and punctuation corrected for proper editorialization due to crappy writing job by author.)

It looks like things may be starting to unravel for AirTran anyway, they are starting to lose money and they have a bunch of planes coming that they don't really know what to do with.

Ummm... what are you talking about?

Yeah, we lost money this quarter. So did a lot of other airlines.

We'll still be profitable for the year.

Just like last year.

And the year before that... and so on and so forth.

Not hugely profitable, but as long as they're making huge $$$ on their stock options and bonuses and can still post a yearly profit, I doubt the investors will start running away.

Do you know ANYTHING about the airline business?

 

[fam62c]

Wait a second, Hoeksema. Which one is it? YOU are launching RJ service from your hub but question whether your hub can sustain a major expansion?​

Who the h*ll wrote this article anyway? Every other paragraph is one "expert" contradicting another.​

What a bunch of rubbish.
​

That's about the only thing there is to say about this. Nothing new here...

(Spelling, sentence structure, and punctuation corrected for proper editorialization due to crappy writing job by author.)

Ummm... what are you talking about?

Yeah, we lost money this quarter. So did a lot of other airlines.

We'll still be profitable for the year.

Just like last year.

And the year before that... and so on and so forth.

Not hugely profitable, but as long as they're making huge $$$ on their stock options and bonuses and can still post a yearly profit, I doubt the investors will start running away.

Do you know ANYTHING about the airline business?

Lear 70:

Don't get me wrong, I'm not bashing Airtran. I respect the company for what they have accomplished and their history of making money in a tough environment. Also, I know that a quarterly loss is not that big a deal. Here's what concerns me though: Airtran is seeing declining RASM and they are still adding more capacity. This reminds me of the old joke: "we're losing money but we're making it up in volume." You tell me, where are all the profitable markets for all the new 737's? Joe Leonard knows this is a problem and realizes that ATL, Florida and running up and down the east coast isn't cutting it anymore. Airtran needs higher yield flying and that's why they are interested in Midwest and doing more East/West flying with a midwestern hub. You don't have to listen to me, listen to your own CEO.

 

[fam62c]

fam62c, its all about money, anything for sale if you pay the right price

FlyWolf:

I agree with you 100%, but it's going to be harder if the incumbent management is fighting back hard. There's no question that Airtran can do it if they have the money but they don't seem to be coming up with more money. I don't think they will get to see the books at 11.25 and without seeing the books they may not offer more. They were in a huge hurry for this deal when they first went public but now they are doing nothing but trying to get it done at 11.25 which will not work. If MEH has a profitable 4Q and a 2006 profit the price of the stock will rise on it's own and make it tougher for Airtran. If they want this they need to get it done because MEH is probably going to get more expensive not cheaper.

 

[Murphy]

Perhaps a good night of scotch drinking and cowtipping may get the deal done.

 

[Ty Webb]

If MEH has a profitable 4Q and a 2006 profit the price of the stock will rise on it's own and make it tougher for Airtran. If they want this they need to get it done because MEH is probably going to get more expensive not cheaper.

Most of MEH's stock value is not driven by its Enterprise Value, or as a multiple of earnings, it's the result of a huge run-up due to whispers of this deal and its subsequent announcement.

Once AirTran backs away from it, the stock price will fall back to earth- and hard.

 

[Ty Webb]

Perhaps a good night of scotch drinking and cowtipping may get the deal done.

I thought those two activities were mutually exclusive.


.

 

[Lear70]

I thought those two activities were mutually exclusive.

No, they're not, as I had the misfortune to learn one night here in TN. uke:

I also learned that there isn't an easy way to discern between a young bull that's still almost full-size and a sleeping cow (female). Until they wake up after you've knocked them over. :lol:

Don't get me wrong, I'm not bashing Airtran.

No worries, everything you posted below is pretty accurate stuff, I might have misinterpreted the tone of your earlier post, pretty hard to convey sarcasm and tone on a message board.

Here's what concerns me though: Airtran is seeing declining RASM and they are still adding more capacity. This reminds me of the old joke: "we're losing money but we're making it up in volume." You tell me, where are all the profitable markets for all the new 737's? Joe Leonard knows this is a problem and realizes that ATL, Florida and running up and down the east coast isn't cutting it anymore. Airtran needs higher yield flying and that's why they are interested in Midwest and doing more East/West flying with a midwestern hub. You don't have to listen to me, listen to your own CEO.

Excellent points, and I definitely share your concern.

I believe quite a few of the routes that we run point to point are not great markets.

I also believe our marketing department isn't doing SQUAT in those markets to stimulate brand recognition.

Those two factors alone aren't helping. Yes, we could use a Midwest hub (no pun intended), and we SHOULD, but I don't believe MKE is it. STILL too far for our 717's in terms of stage length to run up and down the West Coast.

I'd personally like to see us open a hub somewhere much further south and a little further west, make it a 717 base, and do more west coast point-to-point and let the 737's continue to bring east coast traffic in from the west coast cities.

Without buying Midwest.

Obviously I have no say in the matter, but I believe that kind of service would do more for our RASM than more PHF-ROC flights.

 

[SkiFishFly]

Lear 70:

Don't get me wrong, I'm not bashing Airtran. I respect the company for what they have accomplished and their history of making money in a tough environment. Also, I know that a quarterly loss is not that big a deal. Here's what concerns me though: Airtran is seeing declining RASM and they are still adding more capacity. This reminds me of the old joke: "we're losing money but we're making it up in volume." You tell me, where are all the profitable markets for all the new 737's? Joe Leonard knows this is a problem and realizes that ATL, Florida and running up and down the east coast isn't cutting it anymore. Airtran needs higher yield flying and that's why they are interested in Midwest and doing more East/West flying with a midwestern hub. You don't have to listen to me, listen to your own CEO.

I also think we will see some improvement when Delta comes out of bankruptcy and is more profit oriented. Right now they seem to do a lot of things to oppose AirTran even if it means a loss for them. I hope that when they come out of bankruptcy they are a little wiser. They will still have much higher costs than AirTran.
I agree we are kinda out of room in Atlanta. We have lots of east-west flying we could do with the 737s, just a lack of gates to put them on in Atlanta. I do hope someone down there in mgmt has the big picture. They certainly haven't shared it with us yet.

 

[scarlet]

yeah Transcon is where the money is=NOT Airtran posted a loss because of the bonuses to upper magmt. Airtran CEO needs to look at JB's CEO pay!!!!

 

[Lear70]

yeah Transcon is where the money is=NOT Airtran posted a loss because of the bonuses to upper magmt. Airtran CEO needs to look at JB's CEO pay!!!!

Ummm... OK. Sure, what you said.

JL's pay would make such a HUGE difference in our profitability (or BF, or...).

$1 Million to one or two people isn't going to make that big of a difference. That represents probably about 1 tenth of a penny per passenger we fly.

Keep trying though, eventually you'll hit on something that actually WILL affect our RASM (hint: that's an operational cost / load factor / pricing issue and we have just about the lowest non-fuel CASM in the ENTIRE INDUSTRY. Not opinion, that's fact).

 

[Eagle757shark]

Lear70,
I think we would all prefer AirTran find a Midwest city and open up a hub. But that is not possible given that every major city has an airline running a hub from it, and to try to move in on a carrier would be financial suicide for AirTran. The reality is acquiring another carrier is the lesser of two evils. I definitely prefer being the acquirer versus being acquired for obvious reasons. What do Southwest, American, Northwest, US Airways, Delta and Continental all have in common? They have all acquired two airlines in their history to build their current route networks. AirTran can only do so much expanding on the east coast with point to point before they start competing with themselves. That is evident and I believe management understands that now. Sometimes you have to pay to play and that is what may have to happen for AirTran to go where it is trying to go! I imagine more money will be thrown Midwest way real soon. We shall see.....very interesting year ahead.

 

[Lear70]

You're probably right about more money being thrown out there.

I actually wouldn't mind being acquired by SWA, as getting stuck as an F/O at SWA isn't a bad financial proposition, but I doubt any such thing will happen as our 717's don't fit SWA's model and they aren't worth much unless Midwest were to buy them at the same price we bought them (unlikely if this acquisition doesn't go through, as Midwest's stock price and lending ability will likely suffer dramatically).

Not to mention, would they take all our pilots eliminating half our fleet? Doubt it.

It is what it is; we can only hope it's not too big a hit from the integration. I would much rather have merged with Frontier - at least they're growing and hiring and their market hub makes a lot more sense for a West Coast operation.

 

[captainj]

I say we take the 290mil and the 737 next year and just start our own hub in mke.

 

[Lear70]

The $290 Million is primarily in stock, not cash.

Lots of better places to go head-to-head with someone, such as Phoenix, Tucson, Las Vegas, Houston...

If you're going to invade someone's hub, might as well do it in a helpful place for Mid-west to West Coast ops.