FlyAirtran
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MILWAUKEE, April 13 /PRNewswire-FirstCall/ -- The board of directors of Midwest Air Group, Inc. (Amex: MEH - News), parent company of Midwest Airlines, today announced it unanimously recommends that Midwest's shareholders reject AirTran Holdings, Inc.'s (NYSE: AAI - News) revised offer to acquire all outstanding shares of Midwest for a combination of $9.00 in cash and 0.5842 of a share of AirTran common stock. The board advises shareholders not to tender their shares to AirTran.
The board reached its conclusion after discussions with its legal and financial advisors and careful consideration - including a thorough evaluation of the revised AirTran offer, the various alternatives available to Midwest, and Midwest's long-term strategic plan.
"Our board determined that AirTran's revised offer does not take into account the long-term value of our strategic plan," explained Timothy E. Hoeksema, chairman and chief executive officer. "The board believes that Midwest's future holds great promise and that the best interests of all stakeholders lies in Midwest continuing to execute its plan. As the true owners of the company, Midwest shareholders should benefit from the company's long-term plans to continue to create value."
Midwest filed an amendment to Schedule 14D-9 with the Securities and Exchange Commission (SEC) today, which sets forth the reasons for the board's recommendation and related information. These reasons include:
-- AirTran's revised offer is inadequate and does not fully reflect the
long-term value of Midwest's strategic plan, including its strong
market position and future growth prospects.
- The board received an oral opinion from Goldman, Sachs & Co. on April
12, 2007, that as of that date, the revised offer was inadequate from
a financial point of view to Midwest's shareholders (other than
AirTran and its affiliates).
- The board believes that Midwest's strong operating performance in
2006 provides clear evidence of the strength of the strategic plan.
Achievements in 2006 include traffic growth of 21.5%, unit revenue
growth of 12.5% and yield improvement of 5.4%. This strong revenue
performance, combined with Midwest's successful cost-reduction
efforts, generated a $66 million improvement in operating income for
2006 compared with 2005.
- The board noted that the performance of Midwest stock was further
evidence of the success of Midwest's strategy, as the price of the
stock increased by 61% in 2006 prior to the public disclosure of the
AirTran proposal.
- The board maintains that Midwest's strategic initiatives, both those
recently implemented and those planned for the future, will provide
the foundation for profitable growth in 2007 and the years ahead.
Recent strategic initiatives include the establishment of a regional
flying agreement with SkyWest, Inc.; the decision to put two
additional MD-80s into service beginning in mid-2007; the hedge of
approximately 90% of Midwest's 2007 fuel requirements; and numerous
service enhancements implemented since the beginning of this year.
- In recommending rejection of the revised offer, the board considered
Midwest's updated forecast, which reflects the preliminary results of
the first quarter and other developments over the past three months.
-- The board believes that the timing of AirTran's attempts to take over
Midwest is opportunistic and the revised offer is disadvantageous to
Midwest's shareholders. In particular, the board believes that:
- AirTran's attempts to acquire Midwest are timed to take advantage of
the significant strategic initiatives undertaken and investments made
by Midwest during the recent down cycle in the airline industry. The
board believes that industry market conditions will continue to
improve and increasingly favor high-quality carriers like Midwest,
and that AirTran timed the revised offer to acquire Midwest before
these factors are fully reflected in Midwest's share price.
- As of March 31, 2007, Midwest had approximately $171 million of cash,
representing more than $6.50 per share. According to AirTran, the
cash portion of the revised offer and related expenses is
approximately $240 million. Therefore, Midwest's cash on hand
represents more than 70% of the cash estimated by AirTran necessary
to complete the proposed acquisition.
- If the synergies AirTran claims will result from the proposed
combination are realized as AirTran projects, the resulting benefit
to the combined company is not reflected in the value of the
consideration that would be received by Midwest's shareholders under
the revised offer.
- As of December 31, 2006, Midwest had approximately $23 million in net
operating loss tax benefit. A change in control of Midwest could
diminish or delay the realization of this benefit.
-- The value of the consideration being offered by AirTran is uncertain
and highly dependent on the value of AirTran's common stock.
- In assessing the potential consideration to be received under the
revised offer, the board noted the recent stock price performance of
AirTran. During the past 12 months, AirTran's stock price has
declined by 29% compared to a 158% increase in Midwest's stock price
and an approximate 22% increase in an index of network carrier stock
prices (which consists of AMR Corp., UAL Corp., Alaska Airlines,
Continental Airlines and US Airways).
-- Under Wisconsin law and Midwest's Articles of Incorporation, the board
is authorized to consider the interests of stakeholders of Midwest
other than its shareholders - including employees, suppliers, customers
and the communities it serves - when considering an offer of this type.
The board reached its conclusion after discussions with its legal and financial advisors and careful consideration - including a thorough evaluation of the revised AirTran offer, the various alternatives available to Midwest, and Midwest's long-term strategic plan.
"Our board determined that AirTran's revised offer does not take into account the long-term value of our strategic plan," explained Timothy E. Hoeksema, chairman and chief executive officer. "The board believes that Midwest's future holds great promise and that the best interests of all stakeholders lies in Midwest continuing to execute its plan. As the true owners of the company, Midwest shareholders should benefit from the company's long-term plans to continue to create value."
Midwest filed an amendment to Schedule 14D-9 with the Securities and Exchange Commission (SEC) today, which sets forth the reasons for the board's recommendation and related information. These reasons include:
-- AirTran's revised offer is inadequate and does not fully reflect the
long-term value of Midwest's strategic plan, including its strong
market position and future growth prospects.
- The board received an oral opinion from Goldman, Sachs & Co. on April
12, 2007, that as of that date, the revised offer was inadequate from
a financial point of view to Midwest's shareholders (other than
AirTran and its affiliates).
- The board believes that Midwest's strong operating performance in
2006 provides clear evidence of the strength of the strategic plan.
Achievements in 2006 include traffic growth of 21.5%, unit revenue
growth of 12.5% and yield improvement of 5.4%. This strong revenue
performance, combined with Midwest's successful cost-reduction
efforts, generated a $66 million improvement in operating income for
2006 compared with 2005.
- The board noted that the performance of Midwest stock was further
evidence of the success of Midwest's strategy, as the price of the
stock increased by 61% in 2006 prior to the public disclosure of the
AirTran proposal.
- The board maintains that Midwest's strategic initiatives, both those
recently implemented and those planned for the future, will provide
the foundation for profitable growth in 2007 and the years ahead.
Recent strategic initiatives include the establishment of a regional
flying agreement with SkyWest, Inc.; the decision to put two
additional MD-80s into service beginning in mid-2007; the hedge of
approximately 90% of Midwest's 2007 fuel requirements; and numerous
service enhancements implemented since the beginning of this year.
- In recommending rejection of the revised offer, the board considered
Midwest's updated forecast, which reflects the preliminary results of
the first quarter and other developments over the past three months.
-- The board believes that the timing of AirTran's attempts to take over
Midwest is opportunistic and the revised offer is disadvantageous to
Midwest's shareholders. In particular, the board believes that:
- AirTran's attempts to acquire Midwest are timed to take advantage of
the significant strategic initiatives undertaken and investments made
by Midwest during the recent down cycle in the airline industry. The
board believes that industry market conditions will continue to
improve and increasingly favor high-quality carriers like Midwest,
and that AirTran timed the revised offer to acquire Midwest before
these factors are fully reflected in Midwest's share price.
- As of March 31, 2007, Midwest had approximately $171 million of cash,
representing more than $6.50 per share. According to AirTran, the
cash portion of the revised offer and related expenses is
approximately $240 million. Therefore, Midwest's cash on hand
represents more than 70% of the cash estimated by AirTran necessary
to complete the proposed acquisition.
- If the synergies AirTran claims will result from the proposed
combination are realized as AirTran projects, the resulting benefit
to the combined company is not reflected in the value of the
consideration that would be received by Midwest's shareholders under
the revised offer.
- As of December 31, 2006, Midwest had approximately $23 million in net
operating loss tax benefit. A change in control of Midwest could
diminish or delay the realization of this benefit.
-- The value of the consideration being offered by AirTran is uncertain
and highly dependent on the value of AirTran's common stock.
- In assessing the potential consideration to be received under the
revised offer, the board noted the recent stock price performance of
AirTran. During the past 12 months, AirTran's stock price has
declined by 29% compared to a 158% increase in Midwest's stock price
and an approximate 22% increase in an index of network carrier stock
prices (which consists of AMR Corp., UAL Corp., Alaska Airlines,
Continental Airlines and US Airways).
-- Under Wisconsin law and Midwest's Articles of Incorporation, the board
is authorized to consider the interests of stakeholders of Midwest
other than its shareholders - including employees, suppliers, customers
and the communities it serves - when considering an offer of this type.
