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ANCFlyer
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AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 4:22 am

Part Two from this Thread.
Airtran Proposes Merger With Midwest Air (by Travatl Dec 13 2006 in Civil Aviation)
FOR THOSE THAT FOUGHT FOR IT, FREEDOM HAS A FLAVOR THE PROTECTED WILL NEVER KNOW OR UNDERSTAND
 
justplanenutz
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 4:32 am

OK YX fans, time to shine. The other thread is over 300, with nothing about a long-term success plan without FL. Some good analysis of the hurdles FL faces and plenty of hometown boosterism, but that is not what I am looking for. The first stock I ever bought was Braniff before it tanked the first time--Dallas seemed to be rallying around it (Tom Landry even did TV for them) and I couldn't imagine that Dallas would let them fail. It did. Lesson learned.

So, the three outcomes I can see are:

1) KEEP GOING THEN FAIL--eveyone loses. Boeing parks the fleet, employees start over, investors are wiped out. See Braniff.
2) SELL TO SOMEONE ELSE--who? FL is the only buyer that won't park the fleet, so its a liability. MCI and MKE are not capacity constrained, so anyone who wants to come in for free can. Everyone else has learned airlines within an airline (you can call it product differentiation if you want, but it is what it is) don't work, and you guys claim cheeseheads will walk rather than fly some other tin, so where's the value there? The limited slots and gates at DCA and LGA are the only real value, greatly outweighed by the liabilities. What value to someone else am I missing?
3) KEEP GOING BUT WIN--that's where I need help. YX, through painful choices (sorry rampers), has managed to become a breakeven proposition. And that's at the top of a business cycle, with limited LCC competition, and in an increasing fare environment. To get there, it has already converted a quarter of its fleet and 37% of its seats to an LCC model. All future planes won't do 2x2, so no growth there. In fact, as LCC competition increases and the economy tanks (I know, ugh, it will), I think they'll have to convert more capacity to Saver. And, they'll soon be a 2 type small airline within an airline carrier. Maybe they wind up a 1 class, 2 type small carrier?

So how's #3 less risky or more lucrative for stakeholders than merging with FL? Boeing gets to keep the 717's in the air, employees have a shot at maintaining their seniority and any job losses probably come from attrition, and investors get a more certain return.

So let me hear--what's your future? But, please, no FL sucks and YX rules--I already know how to lose my shirt on that.
 
wingsoffaith78
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 5:10 am

YX will never be sold to value jet, YX been in business for 20 something years and been know for their quality product. YX and FL dont have the same product you cant compare nor merge them
 
BH
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 5:15 am

Quoting Wingsoffaith78 (Reply 2):
YX will never be sold to value jet

Well first post after some one just asked

Quoting JustPlaneNutz (Reply 1):
So let me hear--what's your future? But, please, no FL sucks and YX rules--I already know how to lose my shirt on that.

and we already have a cheap shot. I must say good job!!!

The last thread was pretty hostile, so as Justplanenutz asked let try to look at this with out trying to bash one another in this thread.

I was guilty in the last one too, but hopefully everyone has gotten the load off their chest by now.
 
NW748i
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 5:44 am

Earlier today I was in a waiting room watching CNN's 'In the Money' while this poor bim of an 'expert' went on analyzing the 'TranAir - Midwest merger.' If this is the best the media can do, I'm a bit concerned about the impactthat they'll have on public perception on these mergers... Good grief.
Hail! to the victors valiant, Hail! to the conqu'ring heroes, Hail! Hail! to Michigan the leaders and best! Go Blue!
 
KarlB737
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 5:50 am

Courtesy: The Milwaukee Journal

Milwaukee Airport Would Survive With AirTran, But Service Might Suffer

http://www.airportbusiness.com/artic...article.jsp?siteSection=35&id=9307
 
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JBo
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 5:51 am

The last thread was indeed hostile. It was pretty tedious picking out anything of substance among the bickering.

Our good friend Knope2001 started a post with a pretty solid analysis of what could likely become of MKE over the long run should the merger go through, and it didn't look good.

Personally I do not see how the merger would be good for MKE in the long run. A big part of YX's dominance in MKE is not just the hub, but the differentiation in service compared to the other airlines.

AirTran's service is not nearly as unique compared to the rest, which gives them one less competitive edge. I respect AirTran as a company, but they still do not have as unique or as nice a product as Midwest, and thus to come in and take over YX and MKE and lower the product to AirTran's standard is something of an injustice.

YX may not have a ton of money, but they *do* have money, and it's *steady* money for the most part, thanks to that large loyal traveler base. Anything can change in a heartbeat, but some things may not be so volatile for YX as they may for other airlines due to its niche market.

YX has its expansion plans, and in the coming months we will likely see just how they will all pan out.

Personally, I would not be surprised to see the 50-seat contract be announced first. There's a part of my brain that says if Midwest partners up with Air Wisconsin for said contract, Air Wisconsin may turn around and make a significant investment into Midwest like they did with US.

That would certainly thwart AirTran's plans, and also give Midwest a little financial boost for the MD-80 replacements.

The whole situation can be summed up rather easily:

AirTran should learn to keep their hands out of the cookie jar.
I'd take the awe of understanding over the awe of ignorance any day.
 
MSYtristar
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 5:56 am

I hope to see this merger go through. It would be good growth move for FL, who will be seeing dozens of new aircraft enter the fleet over the next few years. They have to fly someplace, and some of them could be used out of MKE/MCI obviously. It's survival of the fittest in this business, and if this goes through, so be it. It obviously makes financial sense of FL to try to see this through. I support them 100%.
 
flyibaby
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 5:57 am

Quoting JustPlaneNutz (Reply 1):
KEEP GOING THEN FAIL--eveyone loses. Boeing parks the fleet, employees start over, investors are wiped out

I agree. If most all these other mergers occur, it becomes survival of the fittest. Midwest needs to swallow their pride and at least sit down with AirTran and figure something out. I'm sure that Midwest offers the residents of MKE a good reliable product, to a few select cities. I believe Vanguard did that for the residents of MCI. Midway also did that most recently for the residents of RDU. Independence continued to win awards after they ceased operations. Midway and Independence both were constantly recognized for their great service, however that didn't seem to make a difference when the doors were padlocked and all the employees given a pink slip.

As much as I hate to say it, AirTran has become a good carrier. They offer flights for a fare ticket price, still give you a drink and a small snack, let you use the XM radio for free, and have found they don't have to route all their planes through a hub.

I guess all I am saying is that it can't hurt YX to sit down and listen face to face to what FL has to say, then let the shareholders take a vote.
 
Cubsrule
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 6:40 am

Quoting Flyibaby (Reply 8):
Midway and Independence both were constantly recognized for their great service, however that didn't seem to make a difference when the doors were padlocked and all the employees given a pink slip.

There's a key difference: YX makes money...

Can someone articulate what FL's strategy is with respect to expansion right now? It seemed like they were getting away from Florida flying by growing places like IND and MDW, but now IND and MDW are seeing seasonal cutbacks to "high yielding business" destinations to permit more Florida flying. FL has essentially made a bid for 25 712s. Where do they see these flying? If they lose their shirt in MKE or MCI, where do these birds go?
I can't decide whether I miss the tulip or the bowling shoe more
 
justplanenutz
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 7:00 am

Quoting Cubsrule (Reply 9):
There's a key difference: YX makes money...

Is that really true. They posted a neglible profit in the most recent 2 quarters,

but here's the operating profit numbers for the last 3 years:

(64,886) (43,132) (13,278) --those are all losses.
 
Cubsrule
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 7:06 am

Quoting JustPlaneNutz (Reply 10):
Is that really true. They posted a neglible profit in the most recent 2 quarters,

Well, a negligble profit is better than no profit at all. How many carriers posted operating losses in 03, 04, and 05? Their financials are far better than DH's ever were.
I can't decide whether I miss the tulip or the bowling shoe more
 
SkyexRamper
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 7:23 am

Quoting Wingsoffaith78 (Reply 2):
YX will never be sold to value jet

How would YX be sold to Value Jet? Airtran merged with Value Jet wipping the Value Jet name off the face of the earth.
Good Luck to all Skyway Pilots! It's been great working with you!
 
sideflare75
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 8:52 am

I heard this from Tim at his talk with employees the other day at the hangar.

AirTran has 14 737's coming next year and they need a place to put them. If they are successful in this merger they will put them in MKE and replace the -80's. If they are not successful what are they going to do with them? He said they have deferred all that Boeing would let them, from 20 down to 14. So are they getting desperate? Is that why they wanted this deal signed this month and done by the first quarter? Could this just be a case of AirTran has too many planes coming and no place to put them? I'm asking these questions to see if I can get another point of view so please take the advice of the first poster and lets be civilized.
 
wingsoffaith78
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 9:01 am

value jet is airtran what do you do to avoid big law sue you change the name of the company and you let the other one die value jet did turn into airtran tim said himself with the board members they will not merge its not beneficial for Midwest airlines
 
sideflare75
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 9:29 am

Quoting Wingsoffaith78 (Reply 14):
tim said himself with the board members they will not merge its not beneficial for Midwest airlines

Saying they won't do it is all well and good but at some price the shareholders will force them to. It obviously won't be at 11.25 but it may well happen. It's time to accept that fact. The employees and the future of Midwest are at the mercy of investors whose only concern is to make money.
 
Cubsrule
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 10:48 am

Quoting Sideflare75 (Reply 15):
The employees and the future of Midwest are at the mercy of investors whose only concern is to make money.

Absolutely agreed, but if the merger flops and YX continues to trade up north of $11 (questionable), than the merger isn't in the best interest of the investors.
I can't decide whether I miss the tulip or the bowling shoe more
 
kstateinALB
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 10:53 am

Quoting Sideflare75 (Reply 15):
The employees and the future of Midwest are at the mercy of investors whose only concern is to make money.

I also agree. Money is everything to people, especially the investors, and that reason alone could make this merger happen.
 
N353SK
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 11:17 am

Quoting Flyibaby (Reply 8):
Midway and Independence both were constantly recognized for their great service, however that didn't seem to make a difference when the doors were padlocked and all the employees given a pink slip.

I don't believe the service on those two carriers were really all that different from the rest of the pack. YX's is. What other airline has 2x2 leather Recaro seating and bakes chocolate chip cookies on board? YX's BOB food is also a step above the rest. Instead of a $5 snack box with crackers, beef jerky and fruit snacks YX sells real, hot, gourmet food.
 
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mke717spotter
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 12:18 pm

Also, wasnt the the concourse D stem at MKE remodeled recently, just for YX's regional jets? I know FL has said they will keep around YX connect but eventually it will be phased out.
Will you watch the Cleveland Browns and the Detroit Lions on Sunday? Only if coach Eric Mangini resigned after a loss.
 
PlanesNTrains
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 1:15 pm

Quoting Wingsoffaith78 (Reply 14):
value jet is airtran what do you do to avoid big law sue you change the name of the company and you let the other one die value jet did turn into airtran tim said himself with the board members they will not merge its not beneficial for Midwest airlines

I'm not sure what your point is in bringing up Valujet, unless it's to slander the current AirTran. Keep in mind though, to the best of my knowledge, VJ592 was a horrible tragedy due to mislabeled oxygen canisters. However, I believe Midwest Express' own pilots flew a DC9 into the ground at MKE. Maybe we should keep reliving that as well?

My point is, it's all meaningless to the current discussion. There has been a lot of valuable conversation taking place in these threads without taking it to the gutter.

-Dave
-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
MSYtristar
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 1:23 pm

Quoting PlanesNTrains (Reply 20):
unless it's to slander the current AirTran

Slandering FL seems like the in thing to do on this website at times, which is amusing since the airline has been one of the more successul airline's flying over the past six/seven years. And i'm not sure why people still bring up the "AirTran is Valujet" thing. That change took place nine years ago I believe. It's time to move on and come up with something more original.

Quoting PlanesNTrains (Reply 20):
Maybe we should keep reliving that as well?

Oh no, don't you know by now, YX can do no wrong since they serve cookies and have big seats.
 
Cubsrule
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 1:39 pm

Quoting Mke717spotter (Reply 19):
Also, wasnt the the concourse D stem at MKE remodeled recently, just for YX's regional jets?

Yes, though the D52 thing (it was D52, wasn't it?) was always fun...

Quoting MSYtristar (Reply 21):
That change took place nine years ago I believe.

But FL is J7. They essentially bought a new name after the bad P.R. resulting from 592. FL/J7 is the last major carrier to be grounded by the FAA (I use "major" not in the DOT sense but in the public opinion sense). It could be seen as a coverup, an attempt to deceive the public.

In a sense, that's what Joe Leonard is doing with this whole YX thing, though I don't know if he's deluding himself along with the public, especially with respect to AL, the potential for success in MKE and MCI, and how the service provided by YX and FL will eventually be integrated.

While it's certainly disingenous to compare today's FL to the J7 of 1997, perhaps this is where people see the similarity. I'd gladly fly FL any day, but as someone who grew up around YX, I don't appreciate the way that FL is deceiving YX shareholders and the flying public.
I can't decide whether I miss the tulip or the bowling shoe more
 
sideflare75
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 1:41 pm

Why not just let it go and not respond to these people who like to call AirTran ValueJet. It is stupid and means nothing. Same goes for talking about Midwest's accident 21 years ago. It serves no purpose in this discussion. So just ignore those people and they will go away.
It's also disrespectful to the innocent people who lost their lives.
 
baw2198
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 1:43 pm

Ok different point of view,

Hopefully somebody knows wisconsin state business law on here.
Is there a provision where by, if a company ( in this case airtran) wants to purchase all available stock of another company (YX) and take them over, is there a grace period set by the state that the purchasing company has to wait a certain amount of time before they can own the amount of stock needed to make 51% controlling interest?

What I'm getting at by that question is, could airtran possibly not knowing wisconsin law (if its written as such) be purchased by YX?
"And remember, Keep your stick on the ice"--->Red Green
 
SkyexRamper
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 1:45 pm

Quoting MSYtristar (Reply 21):
nd i'm not sure why people still bring up the "AirTran is Valujet" thing.

Yes no kidding.....for the last time....Air Tran is Air Tran, NOT VALUJET! ValuJet (dc-9s and md-80s) and Air Tran (737-200s) were two separate airlines until they merged under the Air Tran brand. Since all the dc-9s have been long gone, there is no more Value Jet left over so please let it die for good!

Quoting PlanesNTrains (Reply 20):
However, I believe Midwest Express' own pilots flew a DC9 into the ground at MKE.

mmm...I believe it was a mechanical failure that doomed that flight. Quoted from NTSB report:

DRG TAKEOFF, THE ACFT (MIDWEST EXPRESS FLT 105) WAS CLIMBING THRU ABOUT 450' AGL WHEN THERE WAS A LOUD NOISE AS THE RGT ENG FAILED. SHORTLY THEREAFTER, THE ACFT ENTERED A STEEP DSCNT & CRASHED IN AN APRX 90 DEG, RGT WING LOW, ATTITUDE.
http://ntsb.gov/ntsb/brief.asp?ev_id=20001214X37757&key=1
Either way we should just leave these horrible accidents alone.
Good Luck to all Skyway Pilots! It's been great working with you!
 
sideflare75
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 1:49 pm

Quoting BAW2198 (Reply 24):
is there a grace period set by the state that the purchasing company has to wait a certain amount of time before they can own the amount of stock needed to make 51% controlling interest?

As the CEO explained to employees the other day, once AirTran bought 10% of Midwest's stock, they would have to wait 3 years before they could merge the two companies. That is a Wisconsin law.
Also Midwest has the "poison pill" where once they reached 15%, Midwest can double the amount of stock, essentially doubling the cost of buying the company.
 
LawnDart
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 2:08 pm

Quoting Sideflare75 (Reply 15):
Saying they won't do it is all well and good but at some price the shareholders will force them to. It obviously won't be at 11.25 but it may well happen. It's time to accept that fact.

Actually, the Board of Directors could refuse a buyout offer at any price, and there's nothing AirTran can do about it...of course, shareholders would descend on the next Shareholder's meeting and vote the entire Board out of there, but that could be months from now. Alternately, AirTran could approach a majority of shareholders and get them to agree to sell, but that's time-consuming and expensive.

My point is, a hostile takeover is not as easy as some people make it out. That's why Joe Leonard is pissing and moaning in public...the Board doesn't want to talk to him, and that's their right.

Quoting MSYtristar (Reply 21):
Oh no, don't you know by now, YX can do no wrong since they serve cookies and have big seats.

Midwest is, you have to admit, unique in the U.S. airline industry, and their employees should be justifiably proud of the recognition their company has received in poll after poll with award after award.

I don't recall the last award AirTran received.
 
PlanesNTrains
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 2:15 pm

Quoting Sideflare75 (Reply 23):
Same goes for talking about Midwest's accident 21 years ago. It serves no purpose in this discussion.

That was my point, but I apologize if it offended anyone by bringing it up.

-Dave
-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
MSYtristar
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 2:16 pm

Quoting Cubsrule (Reply 22):
I don't appreciate the way that FL is deceiving YX shareholders and the flying public.

And what if there isn't any deception? Isn't it all just speculation at this point? The FL of today is a far cry from the J7 of yesterday in terms of business decisions and overall operational practices. There are little similarities left besides the obvious ATL hub and some employees who have stuck around since '04. Let's fact it, J7 was a tarnished brand after 592. A change needed to be made. And as far as I can remember, the press, down here anyway, certainly made it known that Valujet was buying AirTran and keeping the AirTran name. Can you blame them? It's one of the more remarkable turn around stories in the airline industry in recent memory. Even the FL haters have to agree that the airline does what it does well...keeps costs low, fares low, numerous p2p routes, new aircraft, etc.

I have NOTHING against YX...never had the chance to fly them...but I know that FL is looking to grow and well, if this deal goes through in the end, it will be a good move for the larger and more aggressive airline. Who knows, perhaps FL would integrate some of YX's practices....no one really knows.

It'll be interesting to see how this all pans out.

Quoting SkyexRamper (Reply 25):
Either way we should just leave these horrible accidents alone.

I second that.
 
MSYtristar
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 2:20 pm

Quoting LawnDart (Reply 27):
I don't recall the last award AirTran received

You don't recall these two?

1) Entrepreneur Magazine's Best Airline Value (April 2006)

2) Entrepreneur Magazine's Best Low-Fare Airline for 2005 (April 2005)
 
PlanesNTrains
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 2:22 pm

Quoting Sideflare75 (Reply 26):
As the CEO explained to employees the other day, once AirTran bought 10% of Midwest's stock, they would have to wait 3 years before they could merge the two companies. That is a Wisconsin law.

I would think that would put a damper on the value of publicly traded companies based in Wisconsin. However, it could certainly help YX in this instance.

On the flip side, does anyone remember "AirTran Airways dba AirTran Airlines" or whatever it was. Essentially, the original AirTran continued doing business for a while under their existing name, while ValuJet changed their name to AirTran Airways (is that right) and operated the two side by side until the official merger.

They could conceivably do the same with YX - one would be "Airways" and one would be "Airlines".

-Dave
-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
MUWarriors
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 2:59 pm

Quoting LawnDart (Reply 27):
Actually, the Board of Directors could refuse a buyout offer at any price, and there's nothing AirTran can do about it...of course, shareholders would descend on the next Shareholder's meeting and vote the entire Board out of there, but that could be months from now. Alternately, AirTran could approach a majority of shareholders and get them to agree to sell, but that's time-consuming and expensive.

Actually YX has a staggered board setup. Therefore it will take years to completely change over this board. Plus you mentioned the 15% poison pill, and Wisconsin's anti-hostile takeover laws. If YX is willing to hold out it will be extremely hard for FL to do anything. But as an article in the Journal-Sentinel said the other day, pretty much every company has a price, it is a matter of FL being able and willing to reach that price.

Now FL is saying that this is a choice between them and NW:
http://www.jsonline.com/story/index.aspx?id=542609 .
I think NW learned from their last foray, and would be surprised if they tried it again.
 
rampart
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 3:25 pm

Quoting Wingsoffaith78 (Reply 14):
value jet is airtran what do you do to avoid big law sue you change the name of the company and you let the other one die value jet did turn into airtran tim said himself with the board members they will not merge its not beneficial for Midwest airlines

In the old days, Western Union charged for punctuation marks. A-net doesn't, so perhaps it's worth investing in a few periods and commas.

Then again, I've never used a Blackberry and maybe that's what one does these days to preserve thumbstrokes.

Sorry, had to comment. Part 2 is much more readable than Part 1, only a couple nefarious posts. Carry on!

-Rampart.
 
BH
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RE: AirTran Proposes Merger W/ Midwest Air II

Sun Dec 17, 2006 9:32 pm

Quoting Cubsrule (Reply 16):
Absolutely agreed, but if the merger flops and YX continues to trade up north of $11 (questionable), than the merger isn't in the best interest of the investors.

Not saying that YX stock doesnt have the potential to trade at 11+ in the future, But I believe the current price is being stimulated by short term investors that are buying up a lot of stock. just to sell off as soon as the meger would go through, to make some quick money.

Quoting Sideflare75 (Reply 26):
As the CEO explained to employees the other day



Quoting Sideflare75 (Reply 13):
I heard this from Tim at his talk with employees the other day at the hangar

I would be careful how you take what any upper managmet says, at my previous employer we were told that are jobs were safe and that we wouldnt be affected at our station with the USairways reorg., needless to say about a week later they had HR show up and tell us we were shutting down in 30 days.

But I dont know YX managment, so I wont speculate on their truthfulness, you just never know. I just hope that if this does go through, most if not all of YX's workers are accomidated.
 
legacytravel
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RE: AirTran Proposes Merger W/ Midwest Air II

Mon Dec 18, 2006 12:36 am

Quoting Wingsoffaith78 (Reply 2):
YX will never be sold to value jet

They will be sold. I as a Milwaukean could care less if the Best Care in the the Air is sold. I am more concerned with stakeholder value. YX is a outstanding corporate citizen and sponsors many things here in the greater MKE area. They are the title sponsor on the convention center for a example.
If FL would maintain those types of levels here in MKE I would have no concerns.
Now from the airport side of things. I can see UA start up mainline again to DEN. You might see Southwest start service here. B6 is on the way.
And FL would make better use of the 13 gates YX woefully underutilitizes.
You would see MKE-SEA as one route the would use 737 service. MKE-SFO would become year round and quite possibly FL could partner with a international carrier and we could see international flights into and out of MKE maybe 3 times a week by passing the clog that is ORD.
Just my humble viewpoint.
Regards,
Mark in MKE
I love the smell of Jet fuel in the Morning
 
justplanenutz
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RE: AirTran Proposes Merger W/ Midwest Air II

Mon Dec 18, 2006 1:09 am

OK--35 posts later and no one has touched YX's long-term success plan. I'll try one more time:

1) Who else would buy YX and why? The comments about FL needing a place to put their 737s just reinforces why THEY want YX.

2) How can YX survive alone? Despite the comments about loyalty to YX's Signature Service and in general at MKE, YX offers Signature to exactly 0 long-haul destinations at MKE (BOS being the furthest). They had to do Saver in a hurry on the MD-80s in dire financial circumstances. So as they replenish the fleet, do they take Saver upscale (leather, AVOD, etc.) and then merge the levels of service? Surely someone other that me gets that we are at the top of a business cycle and Signature will be under tremendous pressure when biz travel drops and LCC competition spreads to MKE. No?
 
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lightsaber
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RE: AirTran Proposes Merger W/ Midwest Air II

Mon Dec 18, 2006 1:17 am

YX is in an interesting quandry... They are marginally profitable at the peak of the economic cycle. In my opinion, they have only 2 quarters before a major reorganization would be required. So what could thay do to save themselves? For the reality is their total equity is only $18 million! One more year of losses would bring YX's equity below zero.  Sad

We probably can all agree the MD-80's must go. At $60+/bbl the maddogs are tought to make a profit on.

The only solution I see is for an independent YX to continue shrinking. But at some point, the overhead costs would kill them off.  Sad

To me, a merger makes the most sense.

Quoting Cubsrule (Reply 11):
Their financials are far better than DH's ever were.

 rotfl  Except in one category: cash on hand. DH burned through a huge stock of cash quickly. There is not reason when the economy turns south in 2007 that YX wouldn't too.

Quoting Sideflare75 (Reply 13):
If they are not successful what are they going to do with them? He said they have deferred all that Boeing would let them, from 20 down to 14. So are they getting desperate?

FL isn't getting desperate, but they are looking to maximize their return on investment. YX would benefit tremendously by the quick replacement of the MD-80's. So we have a win-win.

Quoting MSYtristar (Reply 21):
YX can do no wrong since they serve cookies and have big seats.

 bigthumbsup  Its like selling a house, all you need is the cookies.  Wink

Lightsaber
I cannot wait to get vaccinated to live again! Warning: I simulated that it takes 50%+ vaccinated to protect the vaccinated and 75%+ vaccinated to protect the vac-hesitant.
 
sideflare75
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RE: AirTran Proposes Merger W/ Midwest Air II

Mon Dec 18, 2006 1:41 am

Quoting BH (Reply 34):
I would be careful how you take what any upper managmet says

Oh don't worry I don't believe everything I hear from anyone anymore. I was simply repeating what I heard to try and garner some other opinions.

As for all the opinions on what is going to happen in MKE no one really knows. Joe Leonard says he knows that Northwest will be back with a vengence. So should Midwest be scared of them? None of their previous attempts to bury YX have succeeded so why worry about them now? If AirTran wants to be so big in MKE why not add some more flights here and let the people decide? I think that has already been answered since they started service here and they know that. As for all the other airlines that "might" be coming to MKE, this too is just speculation.

Why not let Midwest move forward with their plans for growth. I think you will see some growing and some new cities coming next year. Just adding the 2 -88's to the fleet will make a big difference in where YX can go. I read one article that YX was just replacing the 2 -81's that were sold but that is not true. Big difference between these two types that will allow for some new destinations. Sure we may have to wait a couple of years for some "new" airplanes but is that so bad?

Quoting Legacytravel (Reply 35):
I am more concerned with stakeholder value.

And this I still don't understand. If you are a shareholder of YX and want to sell it and make some money then why not just do that. If you would rather invest in AirTran because you believe they have a better chance of survival in the long term then go ahead. Why does a sale of Midwest need to take place? I know there is alot that I do not understand about this process and I freely admit it but this still has me baffled.
 
BH
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RE: AirTran Proposes Merger W/ Midwest Air II

Mon Dec 18, 2006 1:52 am

Quoting Sideflare75 (Reply 38):
Oh don't worry I don't believe everything I hear from anyone anymore. I was simply repeating what I heard to try and garner some other opinions.

I just used the sentence you had because you always hear, they said this and they said that, I wasnt directly telling you not to believe them or imply that you believed them, I was just trying to get across that no one should take to heart anyting coming out of their mouths, and that goes for both sides.
 
longhaulheavy
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RE: AirTran Proposes Merger W/ Midwest Air II

Mon Dec 18, 2006 2:17 am

Quoting BAW2198 (Reply 24):
Hopefully somebody knows wisconsin state business law on here.
Is there a provision where by, if a company ( in this case airtran) wants to purchase all available stock of another company (YX) and take them over, is there a grace period set by the state that the purchasing company has to wait a certain amount of time before they can own the amount of stock needed to make 51% controlling interest?

If AirTran wants to fight this one out using means other than cash, they picked a pretty bad state to do it.

1) A YX shareholder could sue the YX board to say that the board didn't fully investigate and accept a reasonable offer. The trend in business law is that unless the board has been completely negligent, the court won't touch the decision. Particularly in a public case of this nature, no judge would decide in AirTran's favor on that first offer.

2) Wisconsin has strong anti-takeover legislation. I believe the waiting period that you're referring to is 3 years here. A long time in any industry.
 
n917me
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RE: AirTran Proposes Merger W/ Midwest Air II

Mon Dec 18, 2006 6:24 am

Quoting Wingsoffaith78 (Reply 14):
value jet is airtran what do you do to avoid big law sue you change the name of the company and you let the other one die value jet did turn into airtran tim said himself with the board members they will not merge its not beneficial for Midwest airlines

To reach AirTran, you can still call 1800.valujet. If they wanted to rid their past, get rid of the number.

I personally an leaning on the merger not going through, unless FL thows a ridiculous amount of cash out there, over 24.00/share. Even then, I feel it will be tough.

As Tim said in his talk, the YX way it to be quiet and not loud and boisterous as FL has been. The support from the state (gov't and business community, as well as the passengers) has been overwhelming in support of Midwest.
I can tell you from dealing with passengers at the airport, many of the business passengers have been telling us they are urging the WI based business they deal with to support YX, encourage shareholders to do the same. All this support makes you feel good. Thanks to all the supporters.

I do know about the 2007 plans, many of which should be announced in the next month or so.

FL will continue to fight for us, and we are prepared.
 
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TVNWZ
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RE: AirTran Proposes Merger W/ Midwest Air II

Mon Dec 18, 2006 6:40 am

Quoting Wingsoffaith78 (Reply 14):
value jet is airtran what do you do to avoid big law sue you change the name of the company and you let the other one die value jet did turn into airtran tim said himself with the board members they will not merge its not beneficial for Midwest airlines

Just for the record,
ValuJet bought Airtran. Then changed the name. Airtran is ValuJet. Much the same way AW Holdings bought US Airways.

Now..back to the topic...

Do not underestimate Midwest. From the very beginning it has been a niche player. From strictly a corporate shuttle for Kimberly Clark, to a full fledged regional airlines owned by KK, to what it is today. The reason it exists is not to be the biggest in the world, or a whole lot bigger than it is now. The reason they exist is to offer a first class product to the upper-midwest at a price point that will make them money.

Unlike the other mergers that are trying for size and scope, the investors in Midwest know and have endorsed their niche strategy. There is no reason that strategy can not continue even in the consolidated era we are now undergoing. YX has always been a very niche player and can continue to be, if it wants. It does not have to make a lot of money. Just enough to keep the investors happy.
 
n917me
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RE: AirTran Proposes Merger W/ Midwest Air II

Mon Dec 18, 2006 6:41 am

About the 2007 plans, they are aggressive, and expansion will take place. It will be very exciting to see and be part of.

Joe will say whatever he has to to get people to listen. Like most large companies, say what ya have to, get what you want. Then, when you need to do what you really want, blame it on the economics, the newly acquired company and what ever else sounds good. Joe does not care about the people, he wants the aircraft, slots, and in a year or so, he will shrink MKE to a "focus" city, cut routes and screw everyone, including shareholders. Hey everyone, remember he was part of the downfall of Eastern Airlines.
 
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TVNWZ
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RE: AirTran Proposes Merger W/ Midwest Air II

Mon Dec 18, 2006 6:56 am

Quoting N917ME (Reply 43):
he wants the aircraft, slots

That's about it.  checkmark 
 
USPIT10L
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RE: AirTran Proposes Merger W/ Midwest Air II

Mon Dec 18, 2006 6:56 am

Quoting JBo (Reply 6):
Personally I do not see how the merger would be good for MKE in the long run. A big part of YX's dominance in MKE is not just the hub, but the differentiation in service compared to the other airlines.

AirTran's service is not nearly as unique compared to the rest, which gives them one less competitive edge. I respect AirTran as a company, but they still do not have as unique or as nice a product as Midwest, and thus to come in and take over YX and MKE and lower the product to AirTran's standard is something of an injustice.

YX may not have a ton of money, but they *do* have money, and it's *steady* money for the most part, thanks to that large loyal traveler base. Anything can change in a heartbeat, but some things may not be so volatile for YX as they may for other airlines due to its niche market.

YX has its expansion plans, and in the coming months we will likely see just how they will all pan out.

Personally, I would not be surprised to see the 50-seat contract be announced first. There's a part of my brain that says if Midwest partners up with Air Wisconsin for said contract, Air Wisconsin may turn around and make a significant investment into Midwest like they did with US.

The upper midwest is the only part of the country that is relatively untouched by LCCs. It is the lone gaping hole in WN's nationwide network and it is probably where Herb would like to send WN next in a big way (MSP, anyone?). If airTran doesn't get a jump on the midwest soon, WN could take it from them. Granted, I know there are lots of cities that fit WN's business plan that are not served by them yet, but it would not surprise me if WN starts service somewhere in the midwest soon.

MKE could be an excellent midcon hub for FL, especially seeing how underutilized it is by YX. I am glad that most of the Florida-MKE service has been made year-round now, with only RSW remaining seasonal. The fleets and network fit very well, so there would not be DOJ concerns.
It's a Great Day for Hockey!
 
n917me
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RE: AirTran Proposes Merger W/ Midwest Air II

Mon Dec 18, 2006 7:31 am

Quoting USPIT10L (Reply 45):
MKE could be an excellent midcon hub for FL, especially seeing how underutilized it is by YX. I am glad that most of the Florida-MKE service has been made year-round now, with only RSW remaining seasonal. The fleets and network fit very well, so there would not be DOJ concerns.

How does YX "underutilize" the gates? Have you ever been to MKE during IROPS? Have you sat on an aircraft (YX) waiting for a gate? I have! YX is going to be growing in 07, the gates are going to be utilized more than what they are.

Maybe you think the gates are underutilized, maybe you have been there during a non peak time. For a carrier of YX size, the gates are used accordingly. There are only like 36 mainline aircraft, they all are flying across the country, the less they are on the ground, the more $$ they make. Remember, with the gate setup in MKE, certain gates may not be able to have an 80 and a 717 or an 80 and another 80 next to it at the same time. So, when you look at the big picture, with 36 aircraft and a hub in MCI, the gates are not going to be used to their potental. If FL takes YX over, I do not beleive the gates will be used to their potential. FL would have to make MKE a much larger hub for that, WHICH as much as Joe peomises, it not going to happen, look at the history of airline mergers.

joe blows!
 
flyibaby
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RE: AirTran Proposes Merger W/ Midwest Air II

Mon Dec 18, 2006 7:59 am

Quoting Sideflare75 (Reply 26):
As the CEO explained to employees the other day, once AirTran bought 10% of Midwest's stock, they would have to wait 3 years before they could merge the two companies. That is a Wisconsin law.
Also Midwest has the "poison pill" where once they reached 15%, Midwest can double the amount of stock, essentially doubling the cost of buying the company.

Who cares if they have to wait 3 years. As stated above, they could operate a subsidiary for that perod of time, and still add Airtran metal into the mix. To be perfectly honest, the aircraft could actually be painted FL colors with the dba Midwest Airlines next to the passenger door. The poison pill huh? So what? They can only do that one of two ways:
1. Offer a two for one stock split...which won't happen at $11.00 a share
2. Offer more shares of stock, which still, at $11 a share, will be hard to find a bank to finance, much like an IPO.

Quoting MUWarriors (Reply 32):
Actually YX has a staggered board setup. Therefore it will take years to completely change over this board. Plus you mentioned the 15% poison pill, and Wisconsin's anti-hostile takeover laws. If YX is willing to hold out it will be extremely hard for FL to do anything. But as an article in the Journal-Sentinel said the other day, pretty much every company has a price, it is a matter of FL being able and willing to reach that price

Staggered board doesn't really mean much, and I'll tell you why with a prediction. If YX doesn't want to listen to FL, FL will buy at least 10% of YX stock. At the next board meeting, the board will have to let the Airtran representative speak as they have to have at least 1,000 shares to be included on the agenda, and will offer a proxy fight straight to the shareholders. Mark my word on this. At this point, with shareholder approval, it no longer matters what the Wisconsin hostile takeover laws are, or furthermore what the staggered board is comprised of.
 
flyibaby
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RE: AirTran Proposes Merger W/ Midwest Air II

Mon Dec 18, 2006 8:19 am

Quoting N917ME (Reply 46):
with 36 aircraft and a hub in MCI, the gates are not going to be used to their potental.

A hub in MCI? Are you kidding me? Ha! On what standard would YX qualify for anything more than focus city status there? According to the YX 2005 annual report (pg 3) "In Kansas City, Midwest market share rose to 7.7% in 2005 from 4.6 the previous year- placing us fifth in a crowded field for the year and fourth by year's end.

The only carrier large enough there to have in effect a hub, would be WN.
 
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knope2001
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RE: AirTran Proposes Merger W/ Midwest Air II

Mon Dec 18, 2006 8:19 am

Quoting JustPlaneNutz (Reply 36):
OK--35 posts later and no one has touched YX's long-term success plan. I'll try one more time:

1) Who else would buy YX and why? The comments about FL needing a place to put their 737s just reinforces why THEY want YX.

LOL...I wanted to reply this morning, but I had to catch a YX flight.


As far as who else would want to buy YX, I think it's pretty unlikely that anyone else would want them. No big airline would waste the effort for what Midwest has. Smaller ones like Frontier and JetBlue could use a hub where Midwest is, but MKE is just not a big market. And MCI is a true niche for Midwest because they'll always be under the large shadow of Southwest there.

Quoting JustPlaneNutz (Reply 36):
How can YX survive alone? Despite the comments about loyalty to YX's Signature Service and in general at MKE, YX offers Signature to exactly 0 long-haul destinations at MKE (BOS being the furthest). They had to do Saver in a hurry on the MD-80s in dire financial circumstances. So as they replenish the fleet, do they take Saver upscale (leather, AVOD, etc.) and then merge the levels of service?

One would logically think that the 2x2 Signature product would be *most* important on the long-haul flights. Unfortunately it is simply not economically viable. Milwaukee-Florida and Milwaukee-Vegas/west coast are huge, nearly bottomless travel markets (in peak season) with nearly bottomless fare levels. Airlines have come and gone for years in these markets lured in by the siren song of high loads but smacked by the remarkably low yields. So why would anyone choose Midwest over the competition when they both have typical coach seating? There are three reasons. One, frequent flier loyalty is big because Midwest flies to so many more nonstop destinations than anyone else. Second, Midwest is the hometown known entity. Since Midwest started flying nonstop to Florida reliably year after year, ATA, United, Northwest, AirTran, Sun Country, USA3000 and a number of charter airlines have been in and out of these markets. Third, even with 2x3 seating, Midwest does offer a little more than the competition...a few more inches leg room than most, good-quality buy-onboard meals, onboard video digital entertainment for rent, more nonstop flight options than the competition in most cases, and of course the warm cookies on flights after 10am. When Midwest unrolled Saver flights, some wondered how Midwest would actually sell so many *more* seats when the quality of the product was reduced (from 2x2 to 2x3). In fact the Milwaukee market reponded better than most through, and Midwest packs most Saver market flights most of the year. I do think that the M80 replacements will eventually also have a 2x2 premium section to capture that market better, but who knows what the details will be.

The 2x2 product *does* have an important place for Midwest even though it is typically on flights of only about 2 hours (although from Kansas City it is on longer flights.) Two hours is plenty of time to appreciate the wider seats and not buy-onboard meals. And it helps to galvanize the loyalty of frequent business traveler.

Quoting JustPlaneNutz (Reply 36):
Surely someone other that me gets that we are at the top of a business cycle and Signature will be under tremendous pressure when biz travel drops and LCC competition spreads to MKE. No?

We could be at the peak of the business cycle, altough I don't know that's widely agreed upon. But whether we are or not, the assertion is that Midwest is only in the black now -- narrowly -- because pretty much everything happens to be as good as it can be and in those optimal circumstances only Midwest can be marginally profitable. The planets aligned for them now, but as soon as something goes wrong they'll be back to the big losses of 2003, 2004 and 2005 which someone brought up as proof of this. I don't believe this is the case.

First, Midwest has been profitable as of late even in the face of difficult competition. In Milwaukee, Frontier pushes down yields even further than they normally are to the west. AirTran has been very agressive in price even as MKE has been among their weaker stations, and they came back in with MKE-BWI which hurt yields to the east coast including Boston. USA3000 offered very low fares to southwest Florida during peak season. And last but not least, Northwest has not been shy about undepricing their product in Milwaukee. They still flew nonstops to LAX, MCO and LAS all of 2006. Then there's Kansas City, where Midwest flies directly against Southwest to LAX, SAN, MCO and TPA, and essentially directly against them to SFO, SAT and FLL. I'm not saying that increased low-fare competitionn would not put pressure on Midwest, but it's not like they made money because they didn't face it. As a matter of fact, in 2007 they will not face NW nonstops in any of their key Milwaukee markets (other than MSP) and they won't face USA3000 diluting yields to Florida.

(2) Fuel was hardly cheap in 2006 when Midwest made money. Fuel may go up again, but I don't think it is valid to chalk up Midwest's profits to lucking out on cheap fuel. (That may have been the case in the late 90's but hardly in Midwest's profitable last two quarters.)

(3) Midwest made money in the third quarter, the same quarter in which several airlines claimed to take a huge financial hit due to security concerns. AirTran essentially blamed all their financial problems on it. Well Midwest is about as non-international as AirTran is (the scare was in London) yet Midwest made money when AirTran said they couldn't because of this fact. How much more would Midwest have made without this scare?


I'm out of time to type here for now, but I will post a follow-up with places where things have improved or are improving above and beyond what was seen in these profitable quarters later or tomorrow.

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