GO YX!!!!

To: All Midwest and Skyway Airlines Employees
Date: April 13, 2007
From: Timothy E. Hoeksema
Subject: Board Determines Revised AirTran Offer Is Inadequate

This morning we are announcing that the board of directors of Midwest Air Group unanimously recommends that Midwest's shareholders reject AirTran Holdings' revised offer to acquire all outstanding shares of Midwest and advises shareholders not to tender their shares to AirTran.

The board reached its conclusion after discussions with its legal and financial advisors and careful consideration -- including a thorough evaluation of the revised AirTran offer, the various alternatives available to Midwest, and Midwest's long-term strategic plan.

Our board determined that AirTran's revised offer does not take into account the long-term value of our strategic plan. The board believes that Midwest's future holds great promise and that the best interests of all stakeholders lies in Midwest continuing to execute its plan. As the true owners of the company, Midwest shareholders should benefit from the company's long-term plans to continue to create value.

We filed an amendment to Schedule 14D-9 with the Securities and Exchange Commission today, which sets forth the reasons for the board's recommendation and related information. These reasons include:


AirTran's revised offer is inadequate and does not fully reflect the long-term value of Midwest's strategic plan, including its strong market position and future growth prospects.
The board received an oral opinion from Goldman, Sachs & Co. on April 12, 2007, that as of that date, the revised offer was inadequate from a financial point of view to Midwest's shareholders (other than AirTran and its affiliates).
The board believes that Midwest's strong operating performance in 2006 provides clear evidence of the strength of the strategic plan. Achievements in 2006 include traffic growth of 21.5%, unit revenue growth of 12.5% and yield improvement of 5.4%. This strong revenue performance, combined with Midwest's successful cost-reduction efforts, generated a $66 million improvement in operating income for 2006 compared with 2005.
The board noted that the performance of Midwest stock was further evidence of the success of Midwest's strategy, as the price of the stock increased by 61% in 2006 prior to the public disclosure of the AirTran proposal.
The board maintains that Midwest's strategic initiatives, both those recently implemented and those planned for the future, will provide the foundation for profitable growth in 2007 and the years ahead. Recent strategic initiatives include the establishment of a regional flying agreement with SkyWest, Inc.; the decision to put two additional MD-80s into service beginning in mid-2007; the hedge of approximately 90% of Midwest's 2007 fuel requirements; and numerous service enhancements implemented since the beginning of this year.
In recommending rejection of the revised offer, the board considered Midwest's updated forecast, which reflects the preliminary results of the first quarter and other developments over the past three months.

The board believes that the timing of AirTran's attempts to take over Midwest is opportunistic and the revised offer is disadvantageous to Midwest's shareholders. In particular, the board believes that:
AirTran's attempts to acquire Midwest are timed to take advantage of the significant strategic initiatives undertaken and investments made by Midwest during the recent down cycle in the airline industry. The board believes that industry market conditions will continue to improve and increasingly favor high-quality carriers like Midwest, and that AirTran timed the revised offer to acquire Midwest before these factors are fully reflected in Midwest's share price.
As of March 31, 2007, Midwest had approximately $171 million of cash, representing more than $6.50 per share. According to AirTran, the cash portion of the revised offer and related expenses is approximately $240 million. Therefore, Midwest's cash on hand represents more than 70% of the cash estimated by AirTran necessary to complete the proposed acquisition.
If the synergies AirTran claims will result from the proposed combination are realized as AirTran projects, the resulting benefit to the combined company is not reflected in the value of the consideration that would be received by Midwest's shareholders under the revised offer.
As of December 31, 2006, Midwest had approximately $23 million in net operating loss tax benefit. A change in control of Midwest could diminish or delay the realization of this benefit.

The value of the consideration being offered by AirTran is uncertain and highly dependent on the value of AirTran's common stock.
In assessing the potential consideration to be received under the revised offer, the board noted the recent stock price performance of AirTran. During the past 12 months, AirTran's stock price has declined by 29% compared to a 158% increase in Midwest's stock price and an approximate 22% increase in an index of network carrier stock prices (which consists of AMR Corp., UAL Corp., Alaska Airlines, Continental Airlines and US Airways).

Under Wisconsin law and Midwest's Articles of Incorporation, the board is authorized to consider the interests of stakeholders of Midwest other than its shareholders -- including employees, suppliers, customers and the communities it serves – when considering an offer of this type.
The board believes that AirTran's plans to operate the combined company are not credible and would not serve the interests of all stakeholders. The lack of a credible plan creates uncertainty about how those interests would actually be served by the combined company.

As noted above, the board took into account the company's updated forecast. While solidly ahead of the same period in 2006, first quarter 2007 revenue performance was slightly below plan. Midwest expects to report a profitable first quarter on a GAAP (Generally Accepted Accounting Principles) basis. It expects its first quarter loss on a non-GAAP basis to be slightly greater than the loss reported last year on a GAAP basis. Therefore, Midwest now expects its full year 2007 non-GAAP earnings per diluted share to fall in the range of $1.30 to $1.50.

In light of comments received from the staff of the SEC, the board also established a new record date for its Annual Meeting of Shareholders of May 11, 2007 and a new date for its annual meeting of June 14, 2007.

This letter contains forward-looking statements about the results expected under the company's strategic plan and that otherwise may state the company's or management's intentions, hopes, beliefs, expectations or predictions for the future. Words such as "projecting," "expect," "should," "anticipate," "believe," "estimate," "goal," "plan," "objective" or similar words are intended to identify forward-looking statements. It is important to note that the company's actual results could differ materially from the projected results contained in these forward-looking statements. Factors that may cause such a difference to occur include, but are not limited to, fees and expenses incurred in connection with AirTran's unsolicited exchange offer and the risk factors described in "Item 1A. Risk Factors" in the company's "Annual Report on Form 10-K" for the year ended December 31, 2006.

Good, just as expected. Now the battles really on.

You must have clicked the post button just before I did... I got a deletion notice for a duplicate thread.

Anyhow, here's a link to the press release:
http://www.prnewswire.com/cgi-bin/st...story/04-13-2007/0004564894&EDATE=

Synopsis: We are holding out for more money. When you offer us the amount we want, you can have the airline.

So I take it from this press release that they still are not even going to talk with FL? I guess this strategy has worked so far to keep higher bids coming, but I'd hate to be management or on that board if the bid gets pulled.

I've said it before and I'll say it again!

It's like US and DL all over again!

When will AirTran just Give Up and Go Away? Midwest obviously wants to stay the way they are!

more..

http://www.todaystmj4.com/news/local/7008592.html

Quoting Quickmover (Reply 4): but I'd hate to be management or on that board if the bid gets pulled.

What is your basis for that statement? If you read the letter above, you'll see that its the YX cash that is paying for the transaction. YX shareholders really are not getting much out of this. I haven't seen a reason yet for YX to agree to the merger.

How long until FL raises its bid again? This is seems to be a never ending cycle. Airtran raises its bid, Midwest BOD rejects.

Airtran recently said this was their last offer. I would suspect that the institutions might have a different view than Tim & co. Octavian, a 5% holder, wanted talks to start with FL when the bid was $13. Now the bid is over $15 and MEH slams the door again? I may be wrong, but the institutions will now become more vocal. If the bid is pulled, I wouldn't be surprised to see MEH under $10. Institutions don't leave 5 points on the table no matter who you are or what your plan is.

I might add, Tim's plan is now a revised 1st quarter loss for MEH. Why would it be worth more than $15?

Quoting Delta787 (Reply 9): How long until FL raises its bid again? This is seems to be a never ending cycle. Airtran raises its bid, Midwest BOD rejects.

I believe AirTran had stated that this would be the final offer ... how much you want to hang on that statement is up to you.

Quoting Quickmover (Reply 10): Airtran recently said this was their last offer. I would suspect that the institutions might have a different view than Tim & co. Octavian, a 5% holder, wanted talks to start with FL when the bid was $13.

Octavian would. They are speculators. Quick buck and out. The institutions that control the company are not quick buck operations.

Quoting Quickmover (Reply 10): Octavian, a 5% holder, wanted talks to start with FL when the bid was $13.

No they didn't.

From Octavian's letter to Tim.

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.

Quoting Rj777 (Reply 5): When will AirTran just Give Up and Go Away? Midwest obviously wants to stay the way they are!

Unfortunately, Airtran doesn't know how to take a hint. If they did, it would save them the embarrassment of the pie on their face once this is done, if it ever is. Again, they don't know how to take a hint.

Quoting JBo (Reply 11): I believe AirTran had stated that this would be the final offer ... how much you want to hang on that statement is up to you.

I would bet my paycheck that this isn't the last YX has heard from FL. Airtran will still try to work something out, or make one last appeal to the shareholders, or even go so low as to beg to please come to the Airtran side of the argument. They tend to pitch fits like that when they don't get their way.

The BOD has made up its mind, FL's offer is inadequate. The shareholder's silence in pushing for the merger says that they agree with management, FL's offer is inadequate and they want to keep superior service in MKE and all of YX's cities, as compared to FL's shoddy service. With the exception of the Octavion Group, no other shareholder has any interest in merging.

Airtran, learn how to take a hint and save yourself even more embarrassment of being show the door...again. Just walk away.



OttoPylit

Quoting TVNWZ (Reply 12): quick buck operations.

The quicker the better. If you own any stock in any company, you are a speculator.

On another note, why does Tim keep saying Airtran's offer is "opportunistic"? I thought being opportunistic is the whole idea of running any business. Isn't finding good opportunities what a company should do? Should they go out and find a bad deal to buy so it won't be considered "opportunistic"?

Crazy logic.

AirTran's response. Doesn't look like they're walking away any time soon.....

Facts and Shareholders Don't Matter at Midwest
Friday April 13, 11:23 am ET
AirTran Calls Midwest's Rejection of Recent Offer Irresponsible and Company's Growth Plan Delusional


ORLANDO, Fla., April 13 /PRNewswire-FirstCall/ -- AirTran Holdings, Inc. (NYSE: AAI - News), the parent company of AirTran Airways, today responded to Midwest's rejection of AirTran's enhanced offer and reiterated its commitment to its exchange offer for Midwest Air Group, Inc. (Amex: MEH - News), initially launched on January 11, 2007.
ADVERTISEMENT


Joe Leonard, AirTran's chairman and chief executive officer stated, "We are disappointed, but unfortunately not surprised, that the Board of Midwest rejected our materially enhanced offer of $15 per share. This kind of behavior flies in the face of good corporate governance and is clearly irresponsible, demonstrating that the Board is derelict in its fiduciary duty to the Midwest shareholders."

As of yesterday's closing price of AirTran's stock, the airline's current offer is worth $15.75 per Midwest share, a substantial premium to the $8.13 the stock was trading at just prior to the public announcement of AirTran's offer.

"We have a difficult time believing their refusal to enter in discussions with us is based on price," said Leonard. "What is even more incredible is that the Board's rejection came after Midwest's management announced the company will miss, by a substantial amount, its 2007 earnings projection put forth only a few short weeks ago. Midwest is just over 100 days into the year, and already lowering its earnings guidance. How can any truly independent Midwest director vote for management's 'standalone, go-it-alone' plan that is already flawed and pass up, without even bothering to discuss with us, the value and certainty the AirTran offer provides?"

"We had hoped that the Board would demonstrate its fiduciary duty by entering into discussions with AirTran to learn more about our offer, which provides shareholders greater value, employees more jobs and career opportunities, passengers increased service at low fares, and the Milwaukee community a stronger hub with greater economic opportunities. Instead the Board of Midwest has chosen to support management's "Just Say No" policy, favoring the entrenchment of its long tenured executives over their obligations to their shareholders and other Midwest stakeholders."

"Moreover, we have outlined a comprehensive plan that demonstrates how AirTran would generate greater service, economic growth and jobs in Milwaukee than the 'stand-alone plan' -- strategic rationale does not appear to be a factor."

"Despite the Board's rejection, we will move forward with our exchange offer and pursue the election of our three nominees to fill positions on the Midwest board of directors at the now rescheduled June 14 annual meeting of the Midwest shareholders. We have already received an outpouring of support from Midwest shareholders who see the compelling benefits of bringing these two airlines together to create a highly efficient airline with a broad national network, better positioned for success in an increasingly competitive environment, and we look forward to hearing their voices on June 14 when they will make known their desire to either continue on the current plan which has reaped no material growth or profits in five years or join with AirTran to create a formidable competitor that will bring greater value to shareholders, jobs to employees, and growth for the Milwaukee region," concluded Leonard.

Midwest shareholders with questions about how to tender their shares may call AirTran's Information Agent, Innisfree M&A Incorporated, toll-free at 877-456-3422. (Banks and Brokers may call collect at 212-750-5833).

Quoting Joe Leonard: without even bothering to discuss with us, the value and certainty the AirTran offer provides?

And that's where the opportunistic part comes in. Joe seems absolutely convinced that his plan is certain for success in MKE, yet several on this board (especially Knope) have provided telling statistics of FL's past failed expansions.

There's no guarantee that FL's plan for MKE would be successful, so using a term such as "certainty" is somewhat misleading.

If Midwest wants to go it alone, let them. If they have the support of their shareholders, then let them do as they please. If the shareholders really felt Midwest was not doing their "fiduciary responsibility," they'd have tendered a long time ago.

If Midwest goes it alone, the chance of failure is certainly far greater than they think.

Quoting DAYflyer (Reply 18): If Midwest goes it alone, the chance of failure is certainly far greater than they think.

That could very well be, however I think YX is willing to take that chance.

Chances are equally great of AirTran's failure in MKE if the merger were to be successful, since there's really no way of knowing how successful it would be.

I say let YX take the chance, and if they go down, then FL can have the market.

If FL had made the merger attempt two or three years ago, YX would be gone. They've waited a little too long, YX is on their way back up.

Quoting DAYflyer (Reply 18): If Midwest goes it alone, the chance of failure is certainly far greater than they think.

Amen.

I do not see FL letting go of this readily until after the Shareholder's meeting. If shareholders voice strong opposition to the merger then I see Joe dropping out but if there is a glimmer of hope coming out of the meeting then Joe is going to keep driving it until it is done.

Could it be that FL is stepping up the heat on YX by introducing the MKE-LAS routes? If they could get gate space how much more would they add to MKE or perhaps MCI?

I would expect Airtran to flood the MKE market with additonal service soon, and dilute the yields that YX enjoys. I think if Airtran said "we are adding 5 new markets out of MKE, you would see a dramatic drop in the value of YX shares."
don't be surprised to see more activity on the part of airtran, with much lower fares.

I think YX should try to acquire FL. Maybe in some masochistic way thats what FL is looking for.  

Quoting JBo (Reply 10): I believe AirTran had stated that this would be the final offer

Final offer then we go to plan B or Final offer then we leave?
safe

Hey Joe! If the support from the Midwest shareholders is so great why haven't they sold you their shares? This guy reminds me of a picture I saw recently where a pitbull got smacked so many times by a porcupine that you couldn't see its face anymore. Maybe the dog killed the porcupine. It may have won that battle but it obviously from the pics I saw lost the war. Same will be true for Joe and AirTran. Joe and FL will come out with over a thousand quills in its face and sides. Maybe they get YX. But they will take such a financial beating and a beating in the public opinion poll that they will lose the war.

S&P Analyst Research Notes
S&P DOWNGRADES RECOMMENDATION ON SHARES OF MIDWEST AIR GROUP TO SELL, FROM HOLD
10:04 AM ET

MEH again rejects buyout bid from AirTran (AAI 11.63**), saying $9 cash and 0.5842 AAI share is inadequate. We think AAI is unlikely to raise its offer much further, and see risk to MEH shares if AAI drops the offer. For a standalone company, we think MEH is overvalued at about 12X our '07 estimate of $1.25. We think a newly capitalized Northwest Airlines could attempt to regain share in MEH's markets, which could cause MEH to underperform the industry in traffic and revenue growth. We are cutting our 12-month target price by $4 to $11, a below-peers 9X our '07 estimate.

---Well I've riden this ride long enough...time to cash in on the stock. This deal made sense, and then again, it didn't, I do believe what S&P is recommending though.

AirTran will throw the towel in, and the Midwest stock will drop...time to short it.

Regards

Line

Quoting Travatl (Reply 16): Moreover, we have outlined a comprehensive plan that demonstrates how AirTran would generate greater service, economic growth and jobs in Milwaukee than the 'stand-alone plan' -- strategic rationale does not appear to be a factor."

The plan that AirTran presented has been hashed over in these boards and clearly demonstate overcapcity in a lot of markets. AirTran has stated very firmly that the CRJ is not profitable and will help YX fail, yet if one looks at the propsed plan that FL has for MKE about 40% of the MKE flights will be on the CRJ/FRJ. Didn't FL fail at trying to operate the CRJ with their price structure? What makes it different now? I guess it looks good on paper and is easy to show more flights? It also shows flights into markets that are in close proximity to "alternate" airports. CLE & CAK come to mind. I don't see how the "new" FL would serve both cities, especially with CLE landing fees and FL's pricing structure, after all WN has stated that is one of the reasons they have not expanded out of CLE, it is just too expensive.

I emailed AirTran after I have seen a response by them stating Tim was not telling the truth that AirTran was advertising jobs in the JS, however no positions were available on the jobs section of the AirTran website. I went on the AirTran site and Tim was correct, when searching for openings in MKE, the response was, "currently there are no open positions in Milwaukee." But yet AirTran claims that there are 11 positions that have been open since January. If that is true and you have 11 positions open since January, and have not filled any of them, how does AirTran expect to fill all the "new" jobs they promise to create?? I also asked, why has nothing been said of the status of the field station employees job security and would those employees retain their seniority, position, salary (which FL has claimed is higher than YX, again for the East Coast, I know YX pays more), and status (FT/PT).

The response from AirTran.... A generic canned response given about a week after I sent it..:

Thank you for contacting AirTran Airways. We appreciate you taking the time to write us regarding our proposed merger with Midwest Airlines. We understand the announcement has raised feelings of both excitement and concern. Your comments have been logged and forwarded for review.


It is difficult to know many of the particulars associated with the merger since we have been unable to speak with the management of Midwest Airlines. For the most up to date details regarding the proposed merger with Midwest Airlines you can click on the following link:

http://www.airtran.com/midwest/default.aspx


We hope you will take the time to review the current details of the proposal. We look forward to future opportunities to serve you.

Do you really need to talk to the YX management to determine how many field station employees you will keep, what status, pay, etc?

The 2007 growth plan has just recently started (April 1 with the CRJ) so how can one measure or say it has reaped no material growth? BTW, March numbers were up, same were Jan and Feb. I do believe in the past 5 years YX has posted a profit, albeit a small one for 2006. So how can the following statement be true?...

we look forward to hearing their voices on June 14 when they will make known their desire to either continue on the current plan which has reaped no material growth or profits in five years or join with AirTran to create a formidable competitor that will bring greater value to shareholders, jobs to employees, and growth for the Milwaukee region," concluded Leonard.

At this point it is up to the shareholders, do they sell out to AirTran and take a huge risk or do they stick it out with YX?
The huge risk is , " Do I really trust Joe & CO.?" Afterall, they have a history of making big promises to cities and have not followed through or just never materialized.

Ok sorry to be so long.. BTW, I have not mentioned cookies or seats at all, after all, that is not really what Midwest is about.

This is just my opinion, not looking to start arguments or bash other members opinions, to each his own.

I saw the AirTran executive interviewed on CNBC this morning. Of course he emphasized it was a sweet deal for a failing Midwest. But he also added that in the future this would be a textbook study of flawed corporate governance. His tone suggested that the Midwest board is as crooked as the Enron guys!!

Quoting SpencerII (Reply 22): I would expect Airtran to flood the MKE market with additonal service soon

Unless FL moves to concourse C when the hammerhead in completed, they won't be doing to much expansion in MKE since they only have 2 gates. BTW - Anyone know when both YX and FL are going to come out with their 1st quarter results? Thanks.

I believe it was reported previously (on A.net) that FL had been offered, or still has a standing offer for 3 gates at the new C concourse. Perhaps an FL or MKE insider could confirm this?

Here is another of AirTran contradicting theirselves:

Midwest's focus on using smaller, regional jets, often with 50 seats or less, won't work in the long-term, Fornaro said.

However, the plan that FL has for the combined company shows over 40% of MKE flights will be on these smaller regional jets, often with 50 seats or less.

I don't know that framing one's point most favorably is being untruthful. Was there really anything "special in the air" at AA or was it just plain old air?

Quoting MrLineGuy (Reply 26): AirTran will throw the towel in, and the Midwest stock will drop...time to short it.

I don't know if I'd fully short it, but certainly, if you are holding stock, it would be prudent to consider selling now with the assumption that the withdrawal of the offer could cause the stock to fall some non-trivial amount (at which point you could rebuy and either pocket the difference or use it to increase your holding).

Steve

FL has no choice to continue to pursue YX. They have lots of aircraft coming online that they have no place to put and no real growth opportunities.

FL's sour grapes attitude only makes it more obvious how desperate they are.

Quoting JustPlaneNutz (Reply 33): I don't know that framing one's point most favorably is being untruthful. Was there really anything "special in the air" at AA or was it just plain old air?

There's a difference between framing one's point favorably and making statments which are false. Another example from today's letter from AirTran:

Quoting Travatl (Reply 16): continue on the current plan which has reaped no material growth or profits in five years

No material growth in five years?

MEH revenue passenger miles for the first three months of 2002
500,064 (460,506 YX + 39,558 YX*)
http://phx.corporate-ir.net/phoenix....l-newsArticle&ID=277738&highlight=

MEH revenue passenger miles for the first three months of 2007
1,033,906
http://phx.corporate-ir.net/phoenix....l-newsArticle&ID=983630&highlight=

Apparently growth of 106.7% over file years is "no material growth" in the eyes of AirTran?

And lest anyone want to blame this totally on the post-9/11 depressed first quarter of 2002 (although AirTran says "five years" which is indeed back to 2002), if you compare today to the first quarter of 2001, MEH growth is 94%.

AirTran really does themselves a disservice with claims like this which are clearly false. Had they only said "no matieral profits" in five years, that would be a reasonable point of debate. But they didn't. They also claimed Midwest had no growth, which is miles from the truth. Claims like this which are so easily refuted cheapen their arguement and cast doubt over all their claims, including some that might be valid.

Not sure if this is sloppy, desparate, arrogant, or some of each. But it doesn't play well.

According to a MarketWatch article dated January 25, 2007..."Midwest also forecast 2007 earnings of more than $1.70 a share and sales of more than $825 million." Less than three months later we are told..."Midwest now expects its full year 2007 non-GAAP earnings per diluted share to fall in the range of $1.30 to $1.50."

Now it's uncertain if that's comparing GAAP in the first estimate to the noted non-GAAP figure in the updated estimate...but either way it is an admission that they are already trending below plan. Gas in the MKE area is flirting with $3/gallon today (highs for the year), and this isn't even peak driving season. Don't be surprised by further downward revisions to their estimate at this rate.

The point about gas prices not withstanding....perhaps MEH is also being somewhat "sloppy, desparate, arrogant or some of each." Their 2007 estimates perhaps reflect some of those same characteristics...perhaps.

Fl wont come back with another counter offer... but they can be around to pick up the pieces... lets see if they go head to head on any routes in a few months..

Kathy Mykleby Interviews AirTran CEO Joe Leonard - WSIN TV 2 Interview

http://mfile.akamai.com/12894/wmv/vo...ys.com/2007/0413/11856721.200k.asx

3:42 to 4:30 in the interview is pretty interesting as Joe doesn't appear to know who AirTran is nominating to Midwest's board.

In interviewed with Midwest yesterday and they told me all about how it was not going to happen! They said that they really are not compatable as airlines!

Quoting GEnx (Reply 37): According to a MarketWatch article dated January 25, 2007..."Midwest also forecast 2007 earnings of more than $1.70 a share and sales of more than $825 million." Less than three months later we are told..."Midwest now expects its full year 2007 non-GAAP earnings per diluted share to fall in the range of $1.30 to $1.50." Now it's uncertain if that's comparing GAAP in the first estimate to the noted non-GAAP figure in the updated estimate...but either way it is an admission that they are already trending below plan. Gas in the MKE area is flirting with $3/gallon today (highs for the year), and this isn't even peak driving season. Don't be surprised by further downward revisions to their estimate at this rate. The point about gas prices not withstanding....perhaps MEH is also being somewhat "sloppy, desparate, arrogant or some of each." Their 2007 estimates perhaps reflect some of those same characteristics...perhaps.

Could be that Midwest's original 2007 projection of $1.70/share came from sloppy, desparate, or orrogant actions. However it could be none of these, and instead be as they state...that revenue growth is not as strong as their 2007 projections. We don't have a way of knowing, although as stats come out down the road a bit you'll be able to see that some business markets, especially but not limited to EWR and PHL, had weaker traffic year-over-year compared to 2006. Business markets like these book close-in, so you don't see this weakness until about the time the flights actually go. These markets may have looked just fine for the 1st quarter as of 12/31, but as we got into February and March and the short-term business bookings were weak, things looked differently.

We don't have a way to really know for sure what lead to the reduced earnings projection, and that is the key difference between what I pointed out and what you responded with. AirTran's statement that Midwest had no material growth in five years is factually wrong by a great amount and is easily refuted. Glaringly so in my opinion. Feel free to come up with your own scenarios as to how this came to be.

Quoting Knope2001 (Reply 41): AirTran's statement that Midwest had no material growth in five years is factually wrong by a great amount and is easily refuted.

OK, what was YX's fleet count and total revenues (not RPM) 2002 vs. 2007?

From JSOnline article titled 'Midwest stands pat, rebuffs AirTran' from Saturday, April 14...

regarding the newly revised lower earnings estimates - "analyst Brian Nelson of Morningstar Inc., in a research note issued Friday, said the lowering of expected earnings was "likely an indication that leadership's long-term projections are inflated and need to be ratcheted down." Let me translate....Midwest is also throwing s*** at the wall and seeing what will stick! He's just noting that in a more polite way.

To reinforce my point, here are two other analysts' opinions also from the same article - "Two other analysts expect Midwest to come in either at the low end of its now-reduced 2007 earnings estimate, or not make it at all.

Craig Kennison of Robert W. Baird & Co. pegs the yearly earnings at $1.30 a share. James Parker of Raymond James & Associates estimates them at $1.23." SInce some on this board like to point out the accuracy of numbers in % terms, the 1.70 figure was over 30% higher than Baird's number and almost 40% higher than the RJ & A number. Not a small miss in the world of Wall Street and were it not for the prospect of a possible merger, however meager those chances are at this point, MEH stock would get walloped even for Midwest's own revision down to 1.50.

Unless one is completely committed to blindly cheer for Midwest, there is no way to spin the $1.70 number other than it was an attempt to inflate their feathers and flap their wings to ward off the attractiveness of any bid for their airline. Perhaps someone else in MidWest's legal advisory other than Carol Skornica, who is too busy vitriolically and arrogantly 'scorning' AirTran came to the conclusion that these unrealistic earnings numbers better be redressed quickly because should they be triumphant is their epic battle, shareholders will certainly be able to scrutinize those rosy projections WHEN the stock price significantly retraces from its current levels.

And back to gas prices from my previous post...according to the IATA, jet fuel prices are up 10% since last month...not going to help the projected earnings if it doesn't retreat soon. Further, it remains a distinct possibility that higher gasoline prices will damp consumer confidence once more, and if they do, it can and usually does shake business confidence. That could translate into fewer butts in the seats, and/or worse at lower yields just to get them there.

I'm in agreement with those who argue that AirTran has not handled the PR battle as accurately and competently as they could and should have...but I'm also not blind in my allegiance to think that Midwest isn't guilty of their own games to gain traction for their position. Midwest backers could afford to be a little more humble...the folks in Oak Creek aren't walking on water either.

Further quote from the same MJS article.

But another analyst expressed confidence in Midwest's management, saying it was "executing extremely well" and that traffic growth on the airline had been exceptional.

Chris Armbruster, a research analyst for Al Frank Asset Management, a California firm that owns 242,000 Midwest shares, said the company can prosper both on its own or as part of AirTran.

"We've held (Midwest) shares for a long time," Armbruster said. "We acquired them at what we believed to be value prices, and so we think the story has a lot more room to grow."

So I guess Joe saying that there are no analysts that back Midwest, like he did in the interview posted above, is just another exaggeration. Look I think both sides have stretched some truths to help their cause but some are more blatant than others.

We don't know all the reasons for Midwest lowering their forecast and maybe never will. Obviously it came at the wrong time and just gave Joe some more ammunition for his gun. But making $1.40/share is still a 33 million profit. That's not too bad and is right in line with the analysts expectations.

Did Midwest stretch the numbers originally? If you ask me that would be a stupid thing to do for just this very reason. They had to know they would be lowering the forecast and helping Joe's cause so I am doubtful that they did this on purpose. The first quarter obviously was tougher than they thought. I know that Knope can and probably will give statistics that show how traffic on certain routes was down. I can tell you we did have some unexpected mechanical issues that had some planes down for maintenance that no one could have possibly anticipated. That probably didn't help either. As for fuel costs, with 90% hedged for the year, that cost should have been planned for. The rise in jet fuel will only hurt those airlines that have not locked in their fuel costs, and make Midwest's decision all that much smarter.

Quoting Sideflare75 (Reply 44): We don't know all the reasons for Midwest lowering their forecast and maybe never will. Obviously it came at the wrong time and just gave Joe some more ammunition for his gun. But making $1.40/share is still a 33 million profit. That's not too bad and is right in line with the analysts expectations.

Let's also not forget that FL's operating profit margin for 2006 was a paltry 1%, less than several network carriers. FL is not a healthy airline and their outlook is even more cloudy given the aircraft they have on order.

Before somebody jumps all over the change in number of aircraft, remember since 2002 the aircraft are on average larger and significantly better utilized. Revenue passenger miles per mainline aicraft increased about 69% between 2002 and 2006.

Quoting Cubsrule (Reply 48): I've been thinking a lot about t he as yet unexplained reasons that a lot of shareholders are hesitant to tender, and after looking over this thread and others, I think part of the problem is that AAI is being intellectually dishonest about the merger. There are circumstances under which a FL/YX merger would make a lot of sense, but AAI is yet to articulate them. In particular, more intelligent analysis in the following areas would help get shareholders (and the MEH BoD) on board with the merger:

Very good post. Also, AirTan has yet to elaborate on any of the field stations, especially those that overlap. In my opinion, if you want to garner and win support, be honest, upfront, and explain long term plans.