Plan A,b,c What Will Airtrans Next Move Be?

[Eagle757shark]

Now that Midwest's board has rejected AirTran's latest offer, what will their next plan be. They are still attempting to reach the shareholders, but at what cost. For all of us at AirTran we can see how tight it is in Atlanta and with very few gates left our growth opportunities there are limited. So what is next? Let's take a look at what has happened:

Plan A: In 2003 AirTran places an order for 100 737-700 aircraft. US Airways and United airlines enter CH. 11. US Airways' exit from Ch.11 looked uncertain, so be ready to move into east coast territory and take advantage should US Air go under.

Plan B: In 2004 ATA airlines files CH. 11 and AirTran plans to takeover 14 gates at Midway and takeover slots at LGA and DCA. Southwest out bids AirTran.

Plan C: AirTran makes offer to purchase Midwest and build MKE and MCI. As of today Midwest board rejects latest offer.

Looking at what has happened and the change in the industry what realistically can we expect next from AirTran's management. US Air has merged and is out of Ch. 11. United has exited Ch. 11 and Delta and Northwest will exit in the next 6 months stronger. AirTran 4th quarter numbers will be very interesting on January 26, 2007. If they walk away from the Midwest deal, are other deals pending? Frontier, Alaska or an eventual sale to a legacy? Looking at the next 3 years, I definitely believe AirTran will be looking for a partner (and more than just a marketing agreement with Frontier). Who that partner will be, should be interesting. AirTran management has definitely shown their hand to the financial community and the airline community. AirTran is a strong east coast player now. A strong competitor with a young fleet and more airplanes to come. I don't think we are going to dance alone, who will be our next dancing partner?

What are some of your honest opinions? This should be fun!

 

[717capt]

It'll be business as usual. I think Joe and Bob were expecting the response that they got from the Midwest Board and I think they will continue to press the Midwest shareholders and management at Midwest but life will go on. It's interesting to see that the Midwest Board said the "offer was inadequate". So much for all the people that said the airline was not for sale. As I posted on another thread a few weeks ago, "everything is for sale at the right price". Cant blame the Midwest folks for trying to up the ante but I don't think, at least I hope that we will not up the offer. $345 million is more than enough.

Eagle, you ask what will plan D be? Actually I think we are up to plan G or H. There were certain opportunities available to airtran over the last couple of years and either they had their plate full or were contemplating between choice A or B. Some worked out, some didn't. One plan that was told to us by Bob F. at a recurrent class a few years ago was that they were actually looking at a secondary hub at PIT when US pulled out. I don't think it would have worked out unless there was a massive connection schedule to go along with it. US was very succesfull at PIT for years, hell it was their biggest hub, but they made it work with very good connections. We didn't have the hardware to make it work and they knew that.
One thing is for sure, we got airplanes comin and no where to put them. The gates in ATL are all spoken for. Look for a decision in the next few weeks to months as to what plan H will be, then undoubtatley there will be a plan I, J, K, etc....... we're just along for the ride.

 

[Eagle757shark]

717Capt, we are definitely along for the ride. I do think that this management knows that if AirTran is to remain profitable, they will have to make some big moves in the near future. Northeast to Florida has ALWAYS been a very competitive market. Now that US Airways is out of Ch.11 and Delta soon emerging, it will get even more competitive. Southwest, AirTran, Jetblue, US Airways, CAL and Delta are all competing in this market. US Airways, CAL and Delta have international feed. Southwest has the midwest and west coast feed. Jetblue and AirTran mostly have all their eggs in the east coast basket. All the East coast point to point flying AirTran is doing is great until you start competing with yourself. I think AirTran has just about reached that point. Those numbers were indicated in our 3rd quarter numbers and will probable show in our 4th quarter numbers as well, look at our loads. Do I see merger in AirTrans long term future, most definitely. The question is, who?

 

[gt1900]

This isn't over yet guys, not even close... Midwest is trying desperatly not to allow AAI managment to get all the major Midwest shareholders in the same room.. If they allowed that, Midwests new call sign would be citrus and the board of MW would be out of a job.... If Midwests managment was so confident in thier growth plan, they would just get everyone together to show how midwest was worth way more than what AAI has offered... Remember, Midwest's managment does not own the company, they just run it, in the end, they can't make the decision on buying or selling midwest, thats the shareholders (owners of the company's) job..All the board can do is make recomendations.. And MW is trying desperatly not to allow AAI, Midwest managment, and the shareholders in the same room..... If I was a shareholder in Midwest, I would be very nervous of a company that is expanding using MD-80's (a plane most people are getting rid of since they can't compete with new gen a/c) and 50 seat RJ's (a plane that has proven it can't make any money)..... Now, if Midwest order new 737's or was using 70 seat RJ's.. I would feel a little better, but Midwest's growth plan really sucks.. And most the financial advisors are saying the same thing.... I still give it a 50/50 chance of happening.. Hold on for the ride boys.......... BTW.. If midwest doesn't go through... Im thinking AAI and F9 are gonna be getting really cosey..

 

[FlyWolf]

gt1900, I am in way against the merger, but the 2 MD88 everyone is freaking about are the fastest way to cover the routes NWA pulled off this January 07, they never said that its our future growth a/c, we actually started getting rid of some of our own older 80's. Its simply the fastest way to take advantage of the situation, we already have the resources to operate the md88. The company knows very well we need a new a/c for our future growth and I think all the Airtran pressure is helping the company make quick decisions (something we are not very good at).

 

[Bubba Dog]

It is only a matter of time, Airtran will go away now that all the big players are much healthier. They have got their cost down low enough to eventually drive a few LCC's out of business. It is only a matter of time.

Their only hope is to merge and do it quickly!

 

[gt1900]

Bubba dog.. I would be very suprised to see AAI go away. They still have the cheapest operating costs second to SWA.. If anything.. The chit that rolls downhill will reach the LCC's just like it did the majors.. Remember when everyone said USair and UAL were gonners.. They adjusted thier costs, and AAI could do the same.. Besides.. AAI is still supossed to make money for the year.. And that's all that counts... Im sure we will see mergers, but I don't believe AAI is going anywhere... At least not in the next couple years..

 

[Lear70]

It is only a matter of time, Airtran will go away now that all the big players are much healthier. They have got their cost down low enough to eventually drive a few LCC's out of business. It is only a matter of time.

Their only hope is to merge and do it quickly!

The haters can wish...

 

[Eagle757shark]

It is only a matter of time, Airtran will go away now that all the big players are much healthier. They have got their cost down low enough to eventually drive a few LCC's out of business. It is only a matter of time.

Their only hope is to merge and do it quickly!

Bubba Dog, when I asked for honest opinions, I didn't expect an emotional out lash of what you want. First of all, AirTran has shown a profit for the last five years and will show one tomorrow for the whole year 2006. AirTran is not going out of business. Minus fuel, AirTran has the lowest cost structure of any airline. This makes us nimble enough to adjust to any economy.

With 60 firm orders of the 737-700 still on the books and between 15 and 20 717s sitting in the desert and a very strong east coast presence, we are a very attractive PARTNER! AirTran will probable be here for a long time, now the future name may be a mystery! I imagine when the tax right off is no longer to Boeings advantage, they will look to offer those 717s to their largest customer.

 

[ultrarunner]

In all of MEH's press releases related to this, they keep referring to their "long-term-strategic-plan".

WTF is that? Has anyone seen it? Read it? Have I missed it somewhere in the press releases?

Or is the plan they are referring to just two more MD-88's and RJ's flying under contract????