NWA to get 47% stake in Midwest

[123]

Bloomberg News
Last update: September 13, 2007 – 7:49 PM

Northwest Airlines will own 47 percent of Midwest Air Group Inc. after that carrier's buyout is complete.



Eagan-based Northwest, which joined with private equity firm TPG Inc. in buying Midwest, is paying $213.3 million of the $451.4 million price, Midwest said Thursday in a regulatory filing. TPG is providing $238.1 million, or about 53 percent.
Northwest won't have a seat on Midwest Air's board or participate in managing the rival airline. Midwest agreed Aug. 17 to be purchased by Northwest and TPG after an eight-month campaign by AirTran Holdings Inc. to take control of the carrier. Midwest spokeswoman Carol Skornicka repeated Thursday that Northwest "will not participate in the management in any way."

 

[BOHICAgain]

Northwest "will not participate in the management in any way."

yeah right lets just pay 200+ million to own 47% of the airline but lets not get involved. BS.... NWA is planning something

 

[DashTrash400]

The B717 is the most logical DC9 replacement there is, if I say so myself. Anybody know just how permanent the factory shutdown is? Could Boeing resurrect the 717 if they wanted to, or is the tooling all in China somewhere?

 

[Captainjerky]

Hoeksema sold Midwest out

http://www.jsonline.com/story/index.aspx?id=661959

Here's an article from the Milwaukee Journal Sentinel. Short version- Hoeksema courted Northwest because he didn't want AirTran to buy them out.
So in a couple years when Midwest is absorbed into Northwest and you have to take an RJ to Detroit or Minneapolis to go anywhere from MKE, remember who to blame.
That's MUCH better than that silly little plan AirTran had to increase flights and destinations from MKE...
Best of luck to all the Midwest employees...
I'd love to hear Baghdad Carol's positive spin on THAT...

 

[DrewBlows]

NWA to get 47% stake in Midwest

Was the buyout for 100% of the outstanding shares? I guess I was under the impression TPG just acquired a controlling interest (>50%), so perhaps NWA's stake isn't 47% but more like 24%?

 

[Beetle007]

Was the buyout for 100% of the outstanding shares? I guess I was under the impression TPG just acquired a controlling interest (>50%), so perhaps NWA's stake isn't 47% but more like 24%?

I'm not going to do the math, but I'm pretty sure $451.4 million would have bought them 100% of the company. And, overpriced at that.

The title of the article says it all "Northwest Airlines will own 47 percent of Midwest Air Group Inc. after that carrier's buyout is complete."

 

[FlyWolf]

I had a bad feeling from th beginning about that whole TPG/NWA deal. We had some f/o's leave and I know few that are planing to leave.

 

[CitationLover]

As far as a Dc9 replacement, they ALREADY have it with Compass. Why beg Boeing to reset up a production line they NEVER wanted in the first place?

NWA has no interest in Midwest other than stopping AirTran. Theirs was simply a $240 million dollar insurance policy in MKE. They've covered their flank and frankly seem more interested in coveting the international growing markets, which is where all their aircraft delivery and plans show them going (the a330's and 787's). They pay $240 up front, hope the company retains value, all the while collecting code share domestic revenue (while cutting their own domestic routes) and make some money on the IPO in 3-5 years.

I would imagine if things do not improve, look for TPG to duplicate what they did at Continental and fire the current management. Continental turned it around, no reason it can't here.

FlyWolf: How many others are leaving? I need about 8 for a hard line. Latest rumor dujour is the company is set to announce the 737-800 as the replacement in November. This was confirmed (with a wink wink) by DonM this week. To me this would show NWA is not an "active" passive investor as I would imagine the A319 would be their choice for the replacement.

 

[IXLR8]

How many 717's does Midwwest have?

 

[IXLR8]

How many 717's does Midwest have?

 

[CitationLover]

How many 717's does Midwwest have?

25 717's

 

[CitationLover]

How many 717's does Midwest have?

25 717's

hey i might have just won an iphone!

 

[TV9Driver]

I doubt the 717 would be NWA's Dc-9 replacement. They are more likely to sell them to AirTran and just keep the routes. Remember, TPG is about creating a PROFIT, not creating a profitable AIRLINE.

but what the hell do I know....

 

[CitationLover]

I doubt the 717 would be NWA's Dc-9 replacement. They are more likely to sell them to AirTran and just keep the routes. Remember, TPG is about creating a PROFIT, not creating a profitable AIRLINE.

but what the hell do I know....

if they are willing to spend a lot of money to protect their turf against air tran you think they will sell them a/c?!?! makes no sense. besides air tran wants regional airlines to fly their 717 routes from the looks of the TA and how they f@#$ed lear70 and fired him. you should be more concerned with what air tran is going to do with its 717's.

look at america west and continental and the prior relationship with northwest in conjunction with tpg in both deals. they want to create a profitable airline otherwise there is no profit. what assets can midwest sell for more than tpg's stake in midwest air partners llc?

 

[FlyWolf]

FlyWolf: How many others are leaving? I need about 8 for a hard line. Latest rumor dujour is the company is set to announce the 737-800 as the replacement in November. This was confirmed (with a wink wink) by DonM this week. To me this would show NWA is not an "active" passive investor as I would imagine the A319 would be their choice for the replacement.

Citation, I think from what I heard that you will get a hard line soon, a lot of the guys have their stuff out and some are even waiting in pools.

 

[CitationLover]

Citation, I think from what I heard that you will get a hard line soon, a lot of the guys have their stuff out and some are even waiting in pools.

well i hate to see them go, all the people i have met have been outstanding. where are they going?

 

[CRJammin]

NWorst

Amazing how an airline can be in "bankruptcy" one year and buying another airline the next. You think that the private sector could manage that?

 

[FlyWolf]

some guys went to Cal, Nwa, and the FAA.

 

[CitationLover]

some guys went to Cal, Nwa, and the FAA.

those are the three who just left, i meant the ones you said were waiting in the pool(s).

 

[Jmoney]

Steenland

Looks like that b-word in charge at NWA is just trying to drop another turd in the punch bowl!
-He is the king of all a$$es!

 

[DrewBlows]

I'm not going to do the math, but I'm pretty sure $451.4 million would have bought them 100% of the company. And, overpriced at that.

The title of the article says it all "Northwest Airlines will own 47 percent of Midwest Air Group Inc. after that carrier's buyout is complete."

D'oh! I guess if I'd have read the headline I could have figured that out myself.

 

[whymeworry?]

I'm surprised the NW pilots and other employee groups aren't pounding the table this week in the media about this. It seems outrageous that they took so much from you in the BK process then decided to use that money saved for an investment. What happened to investing in the employees.

Consider this, how much revenue did NW loose by cancelling 1000 flights? Had they invested that $240 million into labor relations those 1000 flights would have never cancelled in the first place. How many loyal customers were lost for good due to those cancellations?

Yet another case of imcompetent airline mgmt.

 

[717capt]

I caught a blurb the other day that the justice dept. is having a little heartache about aproving the sale to TPG/NWA as is... I'll see if I can find the link. It mentioned that since NW will own about 47% (I know I know,, 47%, 24%..... whatever?)... Justice may make YX give up some slots at DCA and LGA and SNA.. Again I'll see if I can find the link...

 

[123]

I'm surprised the NW pilots and other employee groups aren't pounding the table this week in the media about this. It seems outrageous that they took so much from you in the BK process then decided to use that money saved for an investment. What happened to investing in the employees..

As much as the pay cuts, furloughs and backward movement sucks, I think it is good to keep Airtran out of our backyard (at least for a little longer).

How many loyal customers were lost for good due to those cancellations?

Please, the customer is concerned about the almighty dollar and just how low of a ticket price they can get. Business travelers maintain points and elite status and therefore, as much as they will complain, 99% will be happy with a few extra frequent flyer miles in their personal account for the hassle. They will continue to book on whichever airline they do every other flight and they will continue to complain about the cancelled flights and how terrible it was, but they will not be lost loyal customers, for the most part.

 

[Captainjerky]

Loyal Customers

[/quote]Please, the customer is concerned about the almighty dollar and just how low of a ticket price they can get. Business travelers maintain points and elite status and therefore, as much as they will complain, 99% will be happy with a few extra frequent flyer miles in their personal account for the hassle. They will continue to book on whichever airline they do every other flight and they will continue to complain about the cancelled flights and how terrible it was, but they will not be lost loyal customers, for the most part.[/quote]


Hey, I realize customers have limited choices sometimes. They want the lowest fare that gets them the best return on their money. If they want to fly out of MSP or DTW, well, Northwest is the only real player anyway.
But it still sounds like you're saying we can crap on customers all we want and they'll still say "thank you" and come back for more. We can't treat them like garbage and laugh because they'll probably just be on next week's flight anyway. That's why competition is good- it gives the people the choice of NOT taking a carrier that hosed them last time. All things being equal, ticket prices should be relatively close across similar destinations from different airlines. If people get a raw deal every time they fly your airline (whatever 'your' airline happens to be), believe me that cost will be less of a factor than knowing they'll get to where they want to go when you promised to get them there. Last airline I worked for, we were so understaffed there were a couple of close destinations from our hub where we routinely sent half a day's worth of flights via ground transportation. You think those people never clued in that they should be picking a different carrier or at least not paying for the first connecting leg to the hub and just driving themselves?
People are after the lowest fare, but there's a point where money isn't everything.
Don't know if you were playing devil's advocate in your last post or not, but I thought it was worth mentioning the way it could be interpreted.

 

[123]

quote]But it still sounds like you're saying we can crap on customers all we want and they'll still say "thank you" and come back for more. We can't treat them like garbage and laugh because they'll probably just be on next week's flight anyway. [/quote]

Captain, that wasn't the intent of my message, thanks for letting me clarify. I think that if service continues to be extremely poor and incapable of providing what has been promised, then a carrier will begin to lose customers. Short term "roadbumps" will most likely reduce loyalty for a little while, but mostly for leisure travelers and by the time they book their next ticket, odds are they will pick the cheapest. Personally, I wish that passengers and airlines truely did care about customer service all the way from purchasing a ticket to the time they leave the airport with their bag. I think that the pendulum has made a full swing away from the customer service but will eventually find its way somewhere in the middle between the service provided today (not much) and the service provided 10-20 years ago (lobster, warm towels, etc).

Believe me, I think that all the cancellations suck and I was a business traveler during my 5.5 yr furlough. I know the wrench that it will put in your schedule and life. Plus, it is not pleasant having to worry the entire time whether or not your flight is going to be the one that gets cancelled.

 

[Captainjerky]

but will eventually find its way somewhere in the middle between the service provided today (not much) and the service provided 10-20 years ago (lobster, warm towels, etc).

Definitely with you on that one- customer service is based on what people are willing to pay for. You can't expect the cheapest fare this side of Greyhound AND big seats with a steak dinner. Right now people care most about ticket prices, but someday it will swing back to a large chunk of people who will pay more (or their companies will pay more!) for the extra amenities, which will drag the overall level of service and 'extras' up with it. I look forward to air travel being a little more 'special' again, instead of just really fast bus service.

 

[Propsync]

I'm surprised the NW pilots and other employee groups aren't pounding the table this week in the media about this. It seems outrageous that they took so much from you in the BK process then decided to use that money saved for an investment. What happened to investing in the employees.

Consider this, how much revenue did NW loose by cancelling 1000 flights? Had they invested that $240 million into labor relations those 1000 flights would have never cancelled in the first place. How many loyal customers were lost for good due to those cancellations?

Yet another case of imcompetent airline mgmt.

Not really. While it does seem odd, at the end of the day, Northwest spent 240 on not having to compete with Airtran. If Airtran were to have gotten Midwest, how much would NW lose just by having to compete? Obviously, that's an unkown, but most folks here would agree it would be very costly. Plus, NW can end up with gates, slots, airplanes (doubtful), and established airline employees.

Somebody mentioned 737? I'd be suprised now if they did go with the 737. I'll put my money on 15 320's with 15 options. I plan on losing that money, too, just for the record.

 

[Occam's Razor]

Amazing how an airline can be in "bankruptcy" one year and buying another airline the next. You think that the private sector could manage that?

W-w-what?

Northwest Airlines is in the "private sector".

If the USAF was buying a 47% stake in Midwest, that'd be another matter.