Who's the other 3 suitors tring to buy Midwest?

[russtgol]

Midwest Air: 4 Suitors for Possible Sale



MILWAUKEE (AP) -- Midwest Air Group Inc., long the object of a takeover attempt by AirTran Holdings Inc., said Friday it has four suitors that want to buy the regional airline.

The Milwaukee-based operator of Midwest Airlines said it has signed confidentiality agreements with four interested parties. That means those four parties can begin looking at Midwest's corporate files as Midwest begins the process of looking at selling off the company.

Midwest did not name the four companies or specify if they were airlines, other types of companies or institutional investors.

But one of them is certainly AirTran Holdings, which operates low-cost AirTran Airways.

Midwest announced on Tuesday a committee of its board of directors will start discussions with AirTran Holdings Inc. and other potential suitors.

The news Friday shows just how many suitors the company has.

The five-member committee will explore all of Midwest's options and make a recommendation to the full board. It cautioned during the earlier announcement that a buyout is not imminent, though a $389 million offer from AirTran is already on the table.

AirTran says it is pleased by the progress. In Milwaukee this week, Joe Leonard, AirTran's chairman and chief executive, pledged to carry out a deal as soon as possible.

The Orlando, Fla.-based company has been courting Midwest since June 2005, when it first offered $78 million. Midwest has steadfastly rejected escalating offers, countering it would be more profitable alone.

The most recent offer, in cash and stock, expires Aug. 10. More than half of Midwest's shareholders have agreed to tender their shares.

Midwest shares fell 30 cents, or 2.14 percent, to $13.70 late Friday, while AirTran shares fell 25 cents, or 2.58 percent, to $9.43.

 

[FlyinGuy]

This thing might look like a last minute baseball trade when the smoke clears.

 

[slackass]

Milwauakee radio was speculating Southwest and Jetblue.

 

[Diesel-9]

NWA is one of them.

 

[sluggo]

Why is Midwest such an attractive target for takeover?

What is going to happen to the pilots if/when there is a takeover?

 

[Lear70]

Why is Midwest such an attractive target for takeover?

It's not.

MKE has always been steady, but never a huge source of revenue from originating passengers. It just makes a good launching point for mid-west cities and a good connection point for east-west flow.

The 717's don't do anyone any good except that AirTran is the only other operator for them. We have the infrastructure set up for them - no one else does.

The only other "serious" offers are likely coming from Northwest just to protect the territory. If they got it, they'd likely reduce the company to next to nothing in a few years and staple the employees to the bottom of their seniority list.

The other offer is likely coming from the one Board member who has been hinting at a purchase of the airline to keep it like it is and he's likely going to run into financing problems. He certainly doesn't have the money to go it alone without bankrupting himself and the business plan as it stands won't work. I find it difficult to believe the board would buy off on this and the shareholders would riot as the stock price plummeted.

The 3rd offer is anyone's best guess. Could be someone just trying to turf protect (Southwest maybe). jetBlue doesn't have the cash nor are they in a position to obtain financing at rates that would allow them to have any kind of realistic profit margin, plus adding a 3rd aircraft to their fleet would be rather foolish.

Everyone likes to say that whoever "buys" Midwest would be able to use their cash on hand to finance the deal. That's not accurate. You have to have cash on hand to run your daily operations and keep as a contingency. You can't rob the company's bank accounts and continue to operate the airline. You'd have to finance a large portion of it, or have the cash yourself on hand, period.

What is going to happen to the pilots if/when there is a takeover?

Depends who gets them. AirTran, you'll probably get a slotted percentage-based seniority integration with fences to keep career expectations, not to mention minimize training expenses. Anyone else? NWA and SWA have a history of stapling anyone they buy...

 

[Whataburger]

Remember what happened when AirTran was trying to buy ATA? Ya'll are crazy if you think SWA is gonna let AirTran scoop up more airlines/planes/airports without us stirring the pot. We've been told that the competitor we should be most scared of is AirTran. We've got mucho purchasing power and MKE has been courting us for years.

 

[russtgol]

I think they are going to be sold but not to Airtran... Or it would of been a done deal already...

 

[CitationLover]

The only other "serious" offers are likely coming from Northwest just to protect the territory. If they got it, they'd likely reduce the company to next to nothing in a few years and staple the employees to the bottom of their seniority list.

ALPA to ALPA I doubt would be a "staple" merger. That being said, we are simply the summer relief Doug needs at NWA in terms of staffing.

The other offer is likely coming from the one Board member who has been hinting at a purchase of the airline to keep it like it is and he's likely going to run into financing problems. He certainly doesn't have the money to go it alone without bankrupting himself and the business plan as it stands won't work. I find it difficult to believe the board would buy off on this and the shareholders would riot as the stock price plummeted.

His negotiated price would be higher than AirTran's in all likelihood so the shareholders would get more money. Why would they riot if they sold their shares?

Everyone likes to say that whoever "buys" Midwest would be able to use their cash on hand to finance the deal. That's not accurate. You have to have cash on hand to run your daily operations and keep as a contingency. You can't rob the company's bank accounts and continue to operate the airline. You'd have to finance a large portion of it, or have the cash yourself on hand, period.

You just defined restricted cash. Midwest has unrestricted cash also. Besides a suitable buyer will have the cash on hand to do what you describe (ie AirTran, NWA, private groups), they can use Midwest's unrestricted cash to do whatever they want since they own it.

Depends who gets them. AirTran, you'll probably get a slotted percentage-based seniority integration with fences to keep career expectations, not to mention minimize training expenses. Anyone else? NWA and SWA have a history of stapling anyone they buy...

SWA probably a staple. NWA, I doubt again due to ALPA to ALPA merger policy. AAA is complaining regarding their unfair treatment, but no active ee got stapled in their treatment under Nicolau.

There is no guarantee AirTran's merger would be friendly or what you described. I imagine the rhetoric will be ratcheted up by both sides if and when it happens and from there it simply becomes a pissing contest.

That being said, I think this is all a move to drive the price up and see if there are some truly serious local interests interested in putting their money where their mouth is and support the local company.

You keep saying "failed business model" Lear70, but they have shown profits as of late (small as they are). While it may not be as successful or as explosively grown as airtran, doesn't mean it's failed. Is NWA, Delta, Continental (2x), USAirways (2x), America West, United failures as they used the taxpayer and we didn't? Obviously there is some value in this "failed business model" as people are lining up to take a look.

 

[Lear70]

Remember what happened when AirTran was trying to buy ATA? Ya'll are crazy if you think SWA is gonna let AirTran scoop up more airlines/planes/airports without us stirring the pot. We've been told that the competitor we should be most scared of is AirTran. We've got mucho purchasing power and MKE has been courting us for years.

You're absolutely right, and SWA could be a major obstacle if they choose to be.

What is keeping them from being the same threat is the lessons learned from the SWA/ATA deal. Unless it's an outright purchase with FULL operational integration and employee retention, the Midwest Board should be very leery of any offer that doesn't substantially increase the profit at the time of sale.

I don't think Midwest pilots would appreciate the same "preferential interviews" deal that SWA gave the ATA pilots...

You're absolutely right about us being SWA's main threat moving forward. We have the lowest non-fuel CASM in the business and still will even with a new contract if we get rid of the negatives and keep the pay raises and we have a decent product.

I've been saying for a long time that we could be a phenomenal airline both for employees, shareholders, and customers if we just got a few things "tweaked" (excuse the expression).

Convert our Satellite XM Radio to Satellite TV. Acquire Midwest AND their customer service. Our customer service is severely lacking in many basic areas, mainly cust service agents. We need more polite people able to handle customers with more finesse. Our on-time and baggage handling numbers speak for themselves.

Additionally, acquire an airline such as Spirit or Frontier with their Canada/Caribbean presence and build on it and you'd have, hands-down, the best LCC in the air, bar none.