Latest rumors about Midwest

[FlyWolf]

Idrather, I agree

 

[atpcliff]

Hi!

DAL's new pilot contract will allow NWA/DAL to keep MWA separate.

cliff
GRB

 

[scarlet]

You think DL will have ATL,MEM,CVG,DTW,MSP,MKE as hubs= until GOV. approval=then drop like flies!!

 

[GOULET!]

I think its way too early to tell what will happen to Midwest now. Even though Northwest paid a "premium", it is still a drop in the bucket in the grand scheme of things.

 

[eightdriver]

Northwest is going to have to decide our fate before the Delta merger can be completed... at least thats what our MEC is telling us. 8

 

[DASHDRIVER]

The official line from the MEC is that with out Delta contract relief one of two things needs to happen. One, Divest us or Two, Absorb us. If the rumor is true about Delta changing their scope to allow ownership of Midex it changes everything. (This is where my guessing starts) Now I think they can gamble on whether or not the DOJ will force a divestment or keep us seperate. Remember the only thing we have to do is secure MKE. We do not need many planes to do that. If they choose that root I think it will be a horrible outcome for Midex flight crews.

DD

 

[FlyWolf]

This was taken from the Majors board:

Now that it is announced, here are some details of what the Delta pilots negotiated:


A three and one-half percent equity stake in the merged Company in fully tradeable stock at the close of the merger

Annual pay raises beginning with a five percent raise on January 1, 2009 and followed by four percent raises every January 1 through January 1, 2012. On January 1, 2011, Delta pilot pay rates will exceed the Letter 46 rates, without even considering the equity each pilot will receive.

A one percent increase to the DC Plan contribution rate beginning in January 2010.

Furlough protection—with certain exceptions, no pilot may be furloughed as a result of the merger for a period from merger announcement until 24 months after the close of the merger.

An increase in the full-pay sick leave bank from 240 hours to 300 hours.

The ability for a pilot returning from disability to refill his full pay sick leave bank once every four years instead of once in a career.

An increase in 737-700 pay rates to match the 737-800 pay rates.

In return for these improvements, we would provide various modifications to our scope clause to enable Delta to proceed with the merger. For example, we would allow the Company to place the Delta code and brand on Northwest flights on an unlimited basis after the close of the merger, provide greater flexibility on minimum block hour protections during the merger process, and permit the Company to retain Northwest’s large stake in Midwest Airlines (previously purchased by Northwest Airlines) while maintaining their separate operational status.

 

[DASHDRIVER]

I wonder what the position of the DOJ is regarding this merger as it stands right now.

 

[CitationLover]

I wonder what the position of the DOJ is regarding this merger as it stands right now.

either way it ain't good.

1) divest us. who will buy us? we will have no negotiating leverage for a seniority integration if that happens.

2) status quo - timmy rules the roost of kimberly clark corporate flight department. we are simply a plug in MKE to stop LCC market share growth.

 

[Propsync]

I figure if nobody mentions Midwest in any other paper but the MJS, that should be your clue of where you stand. I didn't hear what kind of powerhouse all three carriers will make. Good luck, but I think you guys are more than a third wheel. NW will take the loss and pay TPG cost plus a few percent and be done with it. They'll have more than enough on the plate synergizing two major carriers, folding you all in will be a waste of time in my eyes.

 

[FlyWolf]

I truly don't think that the new Delta will allow us to just fold, they will still want Airtran out of Milwaukee

 

[CitationLover]

I truly don't think that the new Delta will allow us to just fold, they will still want Airtran out of Milwaukee

We're a plug, pure and simple.

When this is all over I may be slinging gear for Ty, PCL_128, gt1900, Kharma, etc. when they buy us in the DoJ firesale.

 

[Capt.LongThrust]

I truly don't think that the new Delta will allow us to just fold, they will still want Airtran out of Milwaukee

I think I heard an ATA pilot say that once.

 

[Wesb737fo]

unfortunately, being from the airline mentioned above....

I remember the day when the ATA ship's carpenter came from below and was asked "how long do we have". The reply was " Give us some money and we can stay afloat for a long, long time". Meanwhile, the ship sank lower into the water.

Then the white knight came along and said "we can assist you and we'll keep you afloat for a long long time ( you know what I'm talking about)". Meanwhile the ship sank lower into the water.

Then I was fortunate enough to step into a lifeboat and looked around the see the ship go under...(no disrespect to Titanic victims...may they RIP)

Seriously, for all the Midwest guys, it's no fun being a pawn in a game when families and careers are at stake. I hope for all of our sakes that when the merger-mania ends, we all have jobs and can stop worrying for a while.

I think the best thing that could happen for you guys would be a buyout from the likes of an AirTran, JBLU, Alaska, even SWA. Lets face it, if DAL/NWA and CAL/UAL get together, then being the small fish, we all better gang up.

I'm tired of thinking about all this.....I'm going to go spend time with my wife. OUT.

 

[airline#5]

Delta learned their lesson with AT. THey will not allow them to invade the midwest as they did ATL. With AT liquidity issues, they are in no position to fight it out with the biggest airline ever constucted.

 

[Captainjerky]

Antitrust

The whole thing here boils down to antitrust issues. What do you think the gov't will have to say about a combined NWA/DAL/MidEx in MKE? They're going to have to cough up gates to keep the government happy. That leaves a door open for AirTran, Jetblue, etc, same as it will in Atlanta and every other airport where DAL and NWA both have gates. If they wanted to use Midwest as a placeholder against competition, I'd think they couldn't roll them up into the combined NWA/DAL and get away with that- they'd have to settle for TPG running the show with NWA calling the behind-the-scenes shots.
Just my thought...

 

[FlyWolf]

Delta, Northwest agree to merge

Deal could revive AirTran's bid to buy Midwest Airlines

By TOM DAYKIN
[email protected]

Posted: April 14, 2008

Delta Air Lines Inc. is combining with Northwest Airlines Corp. to create the world's biggest carrier in a $17.7 billion stock swap that will affect air travel around the globe.

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After months of talks, the boards of both airlines agreed to the transaction early Monday evening. The new airline will be called Delta, will be based in Atlanta, and will be led by Delta CEO Richard Anderson.

Depending on what antitrust regulators decide, the deal could provide an opening for AirTran Holdings Inc. to build up its operations at Milwaukee's Mitchell International Airport - and possibly even give it another shot at taking over Midwest Airlines, some airline industry observers say.

Alternately, the combined Delta-Northwest could eventually become the dominant player at Mitchell, because Northwest currently holds a 47% stake in the corporate parent of Midwest Airlines, which accounts for more than half of Mitchell's flights.

Northwest shareholders will receive 1.25 Delta shares for each Northwest share they own. That represents a premium to Northwest shareholders of 16.8%, based on Monday's closing stock prices.

An unspecified number of jobs will be cut through consolidation of overlapping administrative functions, Delta said, but there are no plans to close any airline hubs. The transaction is expected to generate more than $1 billion in annual revenue improvements and cost savings. Delta expects to record one-time merger costs of no more than $1 billion.

U.S. airlines have lost more than 150,000 jobs and over $29 billion since 2001 - a result of too many planes chasing too few customers. To make matters worse, jet fuel prices have nearly doubled since early 2007.

Combining Delta and Northwest "creates a company with a more resilient business model that is better able to withstand volatile fuel prices than either can on a standalone basis," Delta's announcement said.
"Merging Delta and Northwest is the most effective way to offset higher fuel prices and improve efficiencies, increase international presence and fund long-term investment in the business," said the Delta statement.

The transaction has been in the works for many weeks but was hung up because of concerns from the pilots unions for the two companies. Delta pilots have agreed to go along with the merger, but Northwest pilots have not, and announced they intend to oppose the deal.

Delta and Northwest combined will have more than $35 billion in annual revenue and 75,000 employees.

Will require approval

The merger will need approval from the Department of Justice's antitrust section. Delta said there is little overlap in the nonstop routes the two airlines serve.
But the regulatory approval process, expected to be completed later this year, could have big implications in Milwaukee, where Northwest in January acquired a 47% stake in Midwest Air Group Inc. That Oak Creek-based company operates Midwest Airlines and Midwest Connect.

One scenario has antitrust regulators requiring that Northwest sell its Midwest stake in order for the Delta-Northwest merger to gain approval, according to airline industry observers interviewed prior to Monday night's announcement.

"There is no doubt that in the review, the ownership stake in Midwest will be taken into account," said Larry Scarborough, an antitrust attorney and a partner in the Phoenix office of the Bryan Cave law firm. "It is absolutely within the realm of possibility that Northwest would be asked to divest itself of that stake in Midwest."

At Mitchell International, Midwest Air held a 54.2% market share in 2007, according to airport data. Eagan, Minn.-based Northwest's market share was 13.2%, followed by AirTran, of Orlando, with 6.3%, and Delta with 6.2%.

With the merger, Delta would have a 19.4% market share in Milwaukee. Delta also would stand to acquire Northwest's stake in Midwest Air, as well as Northwest's option to eventually buy the majority stake in Midwest Air.

The Justice Department might force Northwest to sell its stake in Midwest Air in order for the merger to gain antitrust approval, said Terry Trippler, who operates Minneapolis-based TripplerTravel .com, an online air travel agency.

If that happens, AirTran might see an opportunity to again try to take over Midwest Air by bidding for Northwest's stake, Trippler said. AirTran would then be positioned to eventually buy the remaining 53% stake of Midwest Air, Trippler said. That majority stake is held by TPG Capital, a Fort Worth, Texas-based investment firm.

The possibility of regulators forcing Northwest to sell its Midwest stake - and AirTran surfacing as the buyer - also was suggested by aviation industry consultant Bob Mann, who operates R.W. Mann & Co., of Port Washington, N.Y.
"I wouldn't be terribly surprised to see AirTran come in," Mann said. "I think they continue to be interested in the (Milwaukee) market."

Blocked AirTran

Northwest invested in Midwest Air to prevent AirTran, a low-cost carrier, from establishing a Milwaukee hub near Northwest's hubs in Minneapolis and Detroit, Mann said.

Still, Delta, which competes heavily with AirTran in Atlanta, and Northwest might be willing to accept AirTran's purchase of the Midwest stake if that's what it takes to gain regulatory approval for the merger, he said.

"This might be small enough of an issue in the whole scheme of things," Mann said.
Before the announcement, an AirTran spokesman and Midwest Airlines Chief Operating Officer Joseph Kolshak declined to comment on how antitrust regulators might respond to the Delta-Northwest merger proposal.

Instead of forcing Northwest to sell its Midwest stake, antitrust regulators could require Delta to give up gates at various airports, said Marisa Thompson, an industry analyst with Chicago-based Morningstar Corp. That could include gates at Mitchell International, where AirTran is expanding.

AirTran's stock price plunged by 35% Friday after the announcement that Frontier Airlines Corp. was reorganizing under Chapter 11 bankruptcy. But AirTran's share price rebounded 20% Monday, after the company assured investors that its balance sheet remained strong, and after Raymond James raised its recommendation from "market perform" to "outperform."

Planned low-fare hub

AirTran competes mainly by offering lower fares. Its plan to build a hub in Milwaukee was based on acquiring Midwest Air and then greatly increasing departures by using slashed fares to draw travelers from northern Illinois and other areas.

Thompson, along with analyst Ray Neidl, of New York-based Calyon Securities, are among the industry observers who believe antitrust regulators probably will not require Northwest to divest its Midwest Air stake.

"Since Republican administrations never met a merger they didn't like, I doubt this will be an issue," said Scott Hamilton, who operates Leeham Co., an aviation industry consulting firm in Issaquah, Wash.
Scarborough, the antitrust attorney, declined to say how the regulators might rule.

"I would imagine the regulators would take a look at this from every conceivable point of view," he said.
Midwest Air's sale to TPG/Northwest came after the Department of Justice declined to challenge the transaction on antitrust grounds, Thompson noted. The $451.8 million sale was completed on Jan. 31.
Midwest Air CEO Timothy Hoeksema says Midwest Airlines continues to compete with Northwest. The companies are working together to buy fuel and other items, however, using their combined purchasing power to obtain lower prices.

Still, Midwest is facing its own cost pressures. The airline pilots union at Midwest Airlines said last week that 35 pilots will soon be laid off as Midwest Airlines looks to trim service in the coming months.

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[FlyWolf]

Here is an article from today's paper


Merger fogs Mitchell's fate

Northwest-Delta deal could yield fewer, costlier flights around state

By TOM DAYKIN
[email protected]

Posted: April 15, 2008

Plans by Delta Air Lines to buy Northwest Airlines eventually could bring fewer departures and higher fares for travelers flying out of Milwaukee's Mitchell International Airport and other Wisconsin airports, airline industry observers said Tuesday.

Northwest/Delta Merger
Photo/AP

A Northwest Airlines flight prepares to leave Detroit on Tuesday. Northwest and Delta Air Lines hope to complete their deal to create the world's largest airline by the year's end. But investors reacted negatively Tuesday, amid word that there are no plans for domestic flight cuts, as well as the challenges of integrating the companies. Experts say cuts - and higher prices - eventually may hit markets such as Milwaukee.

About The Deal

Delta at the controls: Under the deal, which would create the world's largest carrier, the airline would keep Delta's name, Atlanta headquarters and Chief Executive Officer Richard Anderson. The loss of Northwest's Minnesota headquarters would bring an end to eight decades of history between the carrier and the state of Minnesota, though an airline hub would remain there.

By the numbers: The combined company and would have 800 aircraft and 75,000 employees, vaulting it past AMR Corp.'s American Airlines as the world's largest airline by traffic.

Cause and effect: The combination is likely to hasten merger talks among rivals, including United Airlines and Continental Airlines, to counter Delta's wider network.

Driving the decision: In the past year, the cost of jet fuel has risen 77%. The eight largest U.S. carriers may post a combined first-quarter loss of $1.4 billion, according to Merrill Lynch & Co. Source: Wire reports

Northwest is the second-largest carrier at Mitchell, where it had a 13.2% market share in 2007. The combined Delta and Northwest operations would have a market share of 19.4%, with Midwest Airlines/Midwest Connect remaining dominant with a 54.2% share.

Northwest's only nonstop flights from Milwaukee are to its hubs in Minneapolis, Detroit and Memphis, Tenn., while Delta offers nonstop service to its hubs in Atlanta and Cincinnati.

Milwaukee "is a money maker" for Northwest and Delta, said airline industry consultant Darryl Jenkins. As long as those flights continue to be lucrative, Delta probably won't reduce departures from Milwaukee once it takes control of Northwest, he said.

In the longer run, however, things could be different, he said.

While there is little overlap between the Delta and Northwest routes, "there could be opportunities to eliminate unprofitable flights by redirecting traffic from one hub to another," according to a report issued by Standard & Poor's.

"For example, Northwest's Detroit hub is located fairly close to Delta's Cincinnati hub, serves a larger local market, and may be able to handle some traffic that currently connects in Cincinnati more profitably," the report says. "Similarly, Delta's large Atlanta hub may be able to handle some traffic that currently connects in Northwest's Memphis hub."

Executives at Delta and Northwest say there are no plans to reduce flights beyond what already has been announced in recent weeks. Those cuts were the result of record-high fuel prices that are forcing both airlines to reduce costs.

But service cuts likely will continue if the price of fuel continues to rise or if the economy continues to slow down, said Delta President Ed Bastian.

Along with Milwaukee, Delta and Northwest both serve airports in Madison, Green Bay and Appleton. Northwest also serves La Crosse, Wausau, Eau Claire and Rhinelander. The two companies together have 450 employees in Wisconsin.

Both Northwest and Delta "have historic commitments to serve small communities. We expect the merged entity to continue to do that," said Doug Steenland, Northwest president and CEO.

However, industry analysts expect reduced service for smaller markets.

"The lack of detail regarding capacity cuts is to be expected" because the deal still must be approved by U.S. regulators, Kevin Crissey, an analyst with UBS Securities LLC, said in a report. "We have little doubt that smaller hubs will be de-emphasized."

Plans for Senate hearing

U.S. Sen. Herb Kohl (D-Wis.), chairman of the Senate Judiciary Committee's antitrust panel, said he plans to call a hearing.

"While we understand the financial pressures under which the major airlines have been operating, it is nonetheless also vital that this deal does not lead to fare increases and service reductions," Kohl said in a statement.

Another potential factor is Northwest's 47% stake in Midwest Air Group Inc., which operates Midwest Airlines and Midwest Connect.

Airline industry observers differ on whether antitrust regulators will require Northwest to sell that stake in order to gain Department of Justice approval for Delta's purchase of Northwest.

"At the very minium, it would be worth a look," said Michael Waxman, a Marquette University law professor whose subject areas include antitrust.

Northwest invested in Midwest Air last year to prevent low-cost carrier AirTran Holdings Inc. from establishing a Milwaukee hub near Northwest's hubs in Minneapolis and Detroit. A $451.8 million offer from Northwest and Fort Worth, Texas-based investment firm TPG Capital, which owns 53% of Midwest Air, outbid an AirTran offer.

AirTran has since added service in Milwaukee, and some industry observers think it might make another bid for Midwest Air if antitrust regulators require a sale of Northwest's 47% stake.

Potential side effects

Northwest spokeswoman Tammy Lee said its Midwest Air stake wasn't expected to "have any effect on the Northwest-Delta transaction's regulatory review process."

Midwest spokesman Michael Brophy said Northwest's sale to Delta could provide Midwest with opportunities for expanded frequent-flyer programs and expanded code-share agreements, in which airlines sell tickets on each other's flights. Midwest and Northwest have a code-share agreement and complementary frequent-flyer programs.

"But at this point in time, with a merger taking some time to be approved by the federal government and with constant change in the airline industry, we're not going to speculate on potential 'what if' scenarios," Brophy said in a statement.

AirTran spokesman Tad Hutcheson declined to comment pending a decision from antitrust regulators.

The $17.7 billion Delta-Northwest transaction, announced Monday night, is expected to generate more than $1 billion in annual revenue improvements and cost savings. Apparently, the projected cost savings weren't high enough to placate investors, who sold off shares of both Delta and Northwest.
On Tuesday, stock of Northwest closed at $10.28 a share, down 94 cents, or 8.4%. Delta closed at $9.16, down $1.32, or 12.6%.

Meanwhile, the Delta-Northwest tie-up brought renewed speculation that United Airlines and Continental Airlines may be pushed into a merger.
"It's inevitable," said Robert Mann of R.W. Mann & Co., a Port Washington, N.Y.-based airline industry consultant.

The Associated Press and Bloomberg News contributed to this report.

 

[Captainjerky]

Sell-off?

I hope AirTran doesn't consider a buyout of Midwest from NWA if the opportunity presents itself. It's overpriced considering the state of the industry, and for TPG/NWA to make any money off the deal they'd have to ask for much more than AirTran should be willing to pay. In addition, AirTran is well enough set with cash for this current economic crisis; spending all the cash in the bank and loading up an a troubled carrier doesn't seem like good business. Better to stick with the current plans for MKE and let the DAL/NWA thing settle out and apply for more gates that way, and watch what happens to Midwest with the merger in the meantime.

 

[FlyWolf]

I think if the DOJ made them sell Midwest to approve the deal then the price of Midwest will not be any where near what they paid, I bet they will be willing to loose money on the Midwest sale to get the dal/nwa deal approved.