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TVNWZ
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Midwest Gets Lawmaker Support Over Airtran

Tue Mar 27, 2007 7:33 am

emailed to me from Sen. Kohl's office...



FOR IMMEDIATE RELEASE: March 26, 2007

Contact: Lynn Becker or Joe Bonfiglio Phone: (202) 224-5653



THREE SENATORS JOIN KOHL IN OPPOSING AIRTRAN, MIDWEST MERGER

Letter to AirTran Chief Details Competition and Quality Concerns Regarding Takeover Bid



WASHINGTON – Today, three U.S. Senators joined Senator Herb Kohl (D-WI) in sending a letter to the CEO of AirTran, Joseph Leonard, opposing his airline’s takeover attempt of Midwest Airlines. In their letter, Senators Kit Bond (R-MO), Claire McCaskill (D-MO), Ben Nelson (D-NE) and Kohl cite growing concerns that the merger will diminish service quality and competition in their local airline markets. Kohl is the chairman of the Senate Judiciary Committee’s Antitrust, Competition Policy and Consumer Rights subcommittee.



In their letter to Leonard the Senators wrote: “We have very serious concerns that an acquisition of Midwest Airlines by AirTran would appear to jeopardize the enormous consumer benefits realized by many thousands of travelers throughout our states from the frequency and efficiency of the highly competitive service offered by Midwest Airlines serving travelers throughout Wisconsin, Missouri, Kansas and Nebraska. You can expect us to oppose any transaction that will risk substantial harm to the interests of consumers in our home states or harm airline competition overall.”



The letter notes that Midwest operates major hubs at General Mitchell International Airport in Milwaukee and Kansas City International Airport and also provides a critical link from Eppley Air Field in Omaha, Nebraska, to Washington’s Reagan National Airport.



They added: “Air travelers in Wisconsin, Missouri, Kansas and Nebraska have to come to rely on frequent, high quality and competitively priced service to numerous key business and leisure markets throughout the nation directly from these three airports on Midwest Airlines. This award-winning level of service would be cast in serious doubt should Midwest Airlines be acquired by AirTran.”



At a Judiciary Antitrust Subcommittee hearing earlier this month, Thomas Barnett, the chief antitrust official at the Department of Justice (DoJ), agreed to conduct a second look at the competitive effects of the proposed merger should Midwest Airlines's shareholders accept AirTran's bid to acquire Midwest Airlines. Last month, DoJ closed its mandatory investigation of the AirTran/Midwest deal after only a cursory review lasting fewer than 30 days.



During the hearing Kohl said that since 2004 AirTran has exited 29 markets it had promised to serve, sometimes returning in a scaled-down version and sometimes not at all. At Dallas/Ft. Worth, AirTran promised a mini-hub with 30 flights a day to seven destinations by the end of 2004. AirTran never attained more than 17 flights a day at Dallas/Ft. Worth and presently has only eight flights a day to two destinations. Similarly, AirTran has reduced service at Washington Dulles from 16 to seven daily departures and at Pittsburgh from 13 to six.



Full text of the letter below.



Joseph B. Leonard

Chairman and CEO

AirTran Airways



Dear Mr. Leonard:



We have been reviewing AirTran’s plans to acquire Midwest Airlines and write to inform you that your proposed acquisition raises very serious concerns for us.



As you know, Midwest Airlines operates hubs at the airports serving Milwaukee, Kansas City and Omaha. Many thousands of travelers in our states have come to rely on these hubs for low-priced, frequent and convenient service to dozens of cities throughout the nation. Should AirTran acquire Midwest Airlines, the future of these hubs and the significant employment that they represent in our states would appear to be cast into very serious jeopardy.



Overall, Midwest today operates 176 flights a day nationally and operates major hubs at General Mitchell International Airport in Milwaukee and Kansas City International Airport. It also provides a critical link from Eppley Air Field in Omaha, Nebraska, to Washington’s Reagan National Airport. Midwest Airlines and its wholly owned subsidiary Midwest Connect together fly to 55 destinations nationwide, including connecting many smaller communities to the national transportation network. Air travelers in Wisconsin, Missouri, Kansas and Nebraska have to come to rely on frequent, high quality and competitively priced service to numerous key business and leisure markets throughout the nation directly from these three airports on Midwest Airlines. This award-winning level of service would be cast in serious doubt should Midwest Airlines be acquired by AirTran.



In 2006, Midwest Airlines served more than 3,700,000 passengers out of its Milwaukee hub, more than 580,000 passengers out of Kansas City and more than 192,000 passengers out of Omaha. Of course, Midwest Airlines is also a significant employer in all of our states. Any reduction in service as a result of this acquisition would obviously jeopardize these jobs.



In considering AirTran’s proposed acquisition of Midwest Airlines, our first priority is to ensure that this deal does not harm consumers, lead to higher prices, degrade quality of service, or cause a loss of competitive choices. We have very serious concerns that an acquisition of Midwest Airlines by AirTran would appear to jeopardize the enormous consumer benefits realized by many thousands of travelers throughout our states from the frequency and efficiency of the highly competitive service offered by Midwest Airlines serving travelers throughout Wisconsin, Missouri, Kansas and Nebraska. You can expect us to oppose any transaction that will risk substantial harm to the interests of consumers in our home states or harm airline competition overall.



Sincerely,



Herb Kohl (D-WI)

Kit Bond (R-MO)

Claire McCaskill (D-MO)

Ben Nelson (D-NE)



###
 
Cubsrule
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RE: Midwest Gets Lawmaker Support Over Airtran

Tue Mar 27, 2007 8:00 am

It's kind of funny that a Senator would zero in on that OMA-DCA flight (but hey, if it keeps YX around, I'm all for it).
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airtran737
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RE: Midwest Gets Lawmaker Support Over Airtran

Tue Mar 27, 2007 8:02 am

Whoopty do, the got support from Senators from the states where their focus cities are. Is anyone surprised?
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stlgph
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RE: Midwest Gets Lawmaker Support Over Airtran

Tue Mar 27, 2007 8:33 am

Quoting AirTran737 (Reply 2):
Is anyone surprised?

no. however, you fail to skim the surface and realize Bond's influence on such matters.
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JetBlueGuy2006
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RE: Midwest Gets Lawmaker Support Over Airtran

Tue Mar 27, 2007 8:54 am

I am kind of suprised what committee this came from. I would have suspected support for Midwest to come from the Subcommittee on Aviation within the US Senate Committee on Commerce, Science & Transportation. Although I could see it from the Anti-Trust committee.
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Mainland
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RE: Midwest Gets Lawmaker Support Over Airtran

Tue Mar 27, 2007 8:57 am

To a similar end, SEC documents filed today show at least one institutional shareholder going public in its support -- at least at AirTran's current bid -- of Midwest. They leave the door wide open for acceptance of a higher bid though.

There were comments in an older thread asking if institutional investors/hedge funds had said anything definatively regarding their views on the merger -- as I recall the following is more than anybody found back then.

Note: Octavian owns 5% of Midwest's outstanding shares and bought all of its shares between January 29th and now.

March 25, 2007

Mr. Timothy Hoeksema
Chairman and CEO
Midwest Air Group Inc.
6744 South Howell Avenue
Oak Creek, WI 53154

Dear Tim,
It was very nice seeing you when you were in New York. As you are aware, investment funds managed by Octavian currently own in excess of five percent of the shares outstanding of Midwest Air Group Inc. (“Midwest”) and we note the current offer from AirTran Holdings, Inc. (“AirTran”) to combine the two companies. As we expressed to you, Octavian believes that the management team of Midwest, under your leadership, has done an extraordinary job of steering the airline through a time of unprecedented difficulty in the industry while maintaining the highest standards of service to its customers. The many awards received by Midwest and its unusually high brand loyalty are a testament to its world-class product, its outstanding corporate culture and its commitment to excellence.

Octavian does not currently believe that the AirTran proposal reflects the full value of Midwest. We do believe, however, that under the right terms a combination of the two companies makes enormous strategic sense, may bring material synergies, and would significantly de-risk the enterprise for its shareholders, employees, and customers. Octavian believes that a combined Midwest-AirTran could offer a remarkable opportunity to combine the management teams of two of the best run airlines in the country, achieve significant efficiencies, and stimulate more traffic and business in Milwaukee and other core markets. Importantly, as part of a larger company, Midwest would be less susceptible to and better able to deal with the very real threat of new competitive entrants into Milwaukee and would have the benefit of much greater stability in a volatile industry.

In the event AirTran were to materially increase its offer for Midwest Airlines to a level more reflective of the company’s value, we would strongly encourage and expect the board and management team of Midwest to abide by their fiduciary duties and immediately enter into good faith negotiations to effectuate a transaction. We believe that many other shareholders would share that expectation. In the event of a combination, we would also strongly encourage the AirTran board and management to adopt best practices for the combined Midwest-AirTran, including incorporating many of the unique features of Midwest’s product, services and brand that have been developed over the last two decades. We also believe that AirTran would be well served by taking advantage of the unusually strong insight of Midwest’s team by inviting you and other members of the Midwest board and management onto the combined board of directors.

Thank you again and I look forward to speaking with you soon.

Sincerely,

Richard Hurowitz
Chief Executive Officer
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Cubsrule
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RE: Midwest Gets Lawmaker Support Over Airtran

Tue Mar 27, 2007 9:05 am

Quoting Mainland (Reply 5):
To a similar end, SEC documents filed today show at least one institutional shareholder going public in its support -- at least at AirTran's current bid -- of Midwest.


I think this fund is just pandering for a higher bid... that would seem to be why they bought the stock in the first place.

[Edited 2007-03-27 02:06:27]
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quickmover
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RE: Midwest Gets Lawmaker Support Over Airtran

Tue Mar 27, 2007 9:56 am

Regardless of how I feel about this or any merger, politics has no place in this type of transaction. There are clearly no antitrust issues here. This is just about as dumb as that politician a couple of months back who wanted to use govt funds to purchase Midwest shares.

If shareholders want to tender/sell their shares, let them do it.
If shareholders don't want to let their shares go or don't think the offer is high enough, they should be able to keep them.

Let the price of the offer be the incentive, not some Washington clowns that can't balance their own budgets.

Capitalism is a wonderful thing.
 
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mke717spotter
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RE: Midwest Gets Lawmaker Support Over Airtran

Tue Mar 27, 2007 11:37 am

What was the date of the newest deadline for this offer again? I remmember April something, it sure is coming up pretty quickly.
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Mainland
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RE: Midwest Gets Lawmaker Support Over Airtran

Tue Mar 27, 2007 8:06 pm

The tender expiration is April 11.
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TVNWZ
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RE: Midwest Gets Lawmaker Support Over Airtran

Tue Mar 27, 2007 11:14 pm

Quoting Mainland (Reply 5):
To a similar end, SEC documents filed today show at least one institutional shareholder going public in its support -- at least at AirTran's current bid -- of Midwest. They leave the door wide open for acceptance of a higher bid thou

It appears Octavian bought the shares on pure speculation. It first purchased 15,200 on January 29th for $13.1063 a share. They increased their stake almost daily with the latest purchase coming March 16th for only 2,000 shares at $11.6975 per share.

Now they want to get a better bid, sell out for a profit and move to something else. It appears they are just trying to drive up the price as much as they can before unloading. Not a bad plan for short term investors.
 
Mainland
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RE: Midwest Gets Lawmaker Support Over Airtran

Tue Mar 27, 2007 11:40 pm

It's a good plan if it works, certainly. The question remains though; how much higher do they feel constitutes a material increase in the offer, and if AirTran is willing to increase the bid at all?
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TVNWZ
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RE: Midwest Gets Lawmaker Support Over Airtran

Wed Mar 28, 2007 12:33 am

Quoting Mainland (Reply 11):
It's a good plan if it works, certainly. The question remains though; how much higher do they feel constitutes a material increase in the offer, and if AirTran is willing to increase the bid at all?

I doubt it matters to Octavian. they just want the price to go up as far as it will go on speculation and then they will sell on the open market. They are very short term players. Take a stake, make some remarks about increasing value, drive up the price, unload.
 
quickmover
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RE: Midwest Gets Lawmaker Support Over Airtran

Wed Mar 28, 2007 12:35 am

Quoting Mainland (Reply 11):
It's a good plan if it works, certainly. The question remains though; how much higher do they feel constitutes a material increase in the offer, and if AirTran is willing to increase the bid at all?

I don't think it would take much more, if this funds sentiments are the same as other institutions. This type of concern among the institutions might not be enough to tender shares right now, but it might be enough to put a minority number of Airtran representives on the board. I don't think a higher offer is coming until FL looks at the books. If they get some of their people on the board, the books might then open up and they go from there.

Octavian is just basically saying, it doesn't hurt to listen. Everyone wants a higher bid and these money managers want to do the best for their people.
 
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TVNWZ
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RE: Midwest Gets Lawmaker Support Over Airtran

Wed Mar 28, 2007 2:01 am

Quoting Quickmover (Reply 13):
I don't think it would take much more, if this funds sentiments are the same as other institutions. This type of concern among the institutions might not be enough to tender shares right now, but it might be enough to put a minority number of Airtran representives on the board. I don't think a higher offer is coming until FL looks at the books. If they get some of their people on the board, the books might then open up and they go from there.

Octavian is just basically saying, it doesn't hurt to listen. Everyone wants a higher bid and these money managers want to do the best for their people.

I think it will take a lot more. And if any Airtran rep is voted on the board the airline will be sold immediately to AirTran. It would take a majority of votes to elect one member and that means the shareholders have lost confidence in the present board and administration. Everyone knows everyone else. If the other investors want to sell, they will tell the board and the deal will be done. There is no strife or eqivication with the long time institutional investors, right now. Octavian is a short-term, hedge fund investor and cares only about its immediate interest--as it should.

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