rumorboy
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FL May Lower Bid Fo YX

Fri Jul 27, 2007 10:52 pm

They may not extend the offer also.


http://www.jsonline.com/story/index.aspx?id=638797

Whether that bid will stand is to be determined Aug. 10, when AirTran's offer is to expire. It has been extended several times, but Leonard said there was no guarantee it would be extended in the future. In fact, he said, AirTran could lower its bid.

Hoeksema declined to provide any guidance for earnings for the rest of the year or give data to show how Midwest could be managed to produce profits to move its stock to the $15 level, absent an AirTran bid.

"They are spitting in the eye of shareholders," she said. "They have proven that they are bad stewards of this asset. We are going to get them to sell it, if not now, then next year, when we elect three more directors."
 
FreequentFlier
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RE: FL May Lower Bid Fo YX

Sat Jul 28, 2007 8:52 am

While I was highly skeptical at first, it does seem inevitable now that YX will be taken over by FL.

With F9's recent woes, I wouldn't be surprised to see an offer by B6 for them either. Ironically, the consolidation of US airlines may end up coming from the LCCs!
 
srbmod
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RE: FL May Lower Bid Fo YX

Sat Jul 28, 2007 9:09 am

Quoting FreequentFlier (Reply 1):

With F9's recent woes, I wouldn't be surprised to see an offer by B6 for them either. Ironically, the consolidation of US airlines may end up coming from the LCCs!

Myself, I wouldn't be surprised if the current relationship between FL and F9 gets a little cozier. A combined FL/YX/F9 could potentially be a force to deal with.

Quoting Rumorboy (Thread starter):
Hoeksema declined to provide any guidance for earnings for the rest of the year or give data to show how Midwest could be managed to produce profits to move its stock to the $15 level, absent an AirTran bid.

"They are spitting in the eye of shareholders," she said. "They have proven that they are bad stewards of this asset. We are going to get them to sell it, if not now, then next year, when we elect three more directors."

The missteps Midwest management has been making as of late will probably end up being the subject of a lesson in business schools in the future. When you don't listen to the wishes of the stockholders in regards to the future of the company, don't be surprised if the whole house of cards collapses on you. If FL doesn't extend the tender and then submits a lower bid for YX, that's going to seriously tick off some stockholders even more than they already are (as evidenced by some of the reactions to YX earnings call). In a way, you begin to wonder if YX's management is purposely trying to run the airline into the ground rather than to be taken over. Pyhrric victories are never a good for stockholders unless you're short selling shares.
 
Indy
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RE: FL May Lower Bid Fo YX

Sat Jul 28, 2007 10:47 am

Personally I think institutional investors are bottom feeders. They are sitting in their cushy little offices playing airline and trying to make decisions for people that actually know what they are doing. If you can't trust the people that are running the company perhaps you should cash in and maybe start your own airline. When you put the value of your stock ahead of the future of the company, its employees and the community you really need to sell and move on. These investors offer no value added service. In my OPINION unless they are the ones that put the money up when the IPO was made their opinion really doesn't matter. They aren't responsible for the company existing and aren't involved in the day to day operations and that is the way it should remain.
Indy = Indianapolis and not Independence Air
 
surfdog75
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RE: FL May Lower Bid Fo YX

Sat Jul 28, 2007 11:08 am

Most of the upset "investors" are hedge funds who purchased Midwest stock right after the Airtran offer hoping to make a quick buck. The hedge funds constant badgering combined with the PR assault and flooding of the MKE market by Airtran have been devastating for Midwest's business and their employees. This type of predatory campaign should be illegal.

[Edited 2007-07-28 04:30:01]
 
ikramerica
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RE: FL May Lower Bid Fo YX

Sat Jul 28, 2007 12:58 pm

Quoting Surfdog75 (Reply 4):
This type of predatory campaign should be illegal.

Public companies are just that, public. If someone wants to offer to buy all the shares, that is part of being a public corporation. By floating your stock out there and raising funds, you take this risk. If you don't want to be bought out, go private. Then you can refuse to sell no matter how stupid the position is...
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sideflare75
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RE: FL May Lower Bid Fo YX

Sat Jul 28, 2007 1:51 pm

Quoting Surfdog75 (Reply 4):
The hedge funds constant badgering combined with the PR assault and flooding of the MKE market by Airtran have been devastating for Midwest's business and their employees.

While I'll agree the constant banter is distracting at work I don't think anything AirTran has done has been devastating. I think they only added a couple of flights to MKE (BWI and LAS) so I don't think you can call that flooding the market.

Midwest is not the only carrier to have a rough second quarter but they still turned a profit. That seems to be lost on everyone in this rush to write YX off. So it was lower than expected. Sure that sucks and looks bad I will admit but it sure beats a loss. Today in the MKE paper an analyst even agreed that without the costs of the takeover battle and one other unanticipated cost YX would have met the analyst predictions so it wasn't really as bad as it appears.

I don' t think FL will lower the bid either. Joe said in the FL CC that the offer price was not tied to Midwest's performance but to Midwest's value to AirTran. So for him to come out later and say they may lower the offer seems to be an attempt to put more pressure on Midwest through the hedge funds. Obviously with Octavian recently buying more shares at more than $15.00 they expect the price will be even higher and will continue to pester Tim so they can get their money and run while the Ex-Midwest employees can start to collect unemployment. I think Indy said it best when he called them "Bottom Feeders" but unfortunately that is what happens in the real world. The rich just keep trying to get richer and don't really care about the consequences.
 
FreequentFlier
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RE: FL May Lower Bid Fo YX

Sat Jul 28, 2007 3:03 pm

Quoting Indy (Reply 3):
These investors offer no value added service. In my OPINION unless they are the ones that put the money up when the IPO was made their opinion really doesn't matter. They aren't responsible for the company existing and aren't involved in the day to day operations and that is the way it should remain.

Sorry but newsflash: Without the investors, there is no service. Airlines don't run themselves for free.
 
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JBo
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RE: FL May Lower Bid Fo YX

Sat Jul 28, 2007 3:09 pm

Quoting Srbmod (Reply 2):
In a way, you begin to wonder if YX's management is purposely trying to run the airline into the ground rather than to be taken over.

Either that, or:

Quoting Ikramerica (Reply 5):
If you don't want to be bought out, go private.

I could see YX trying to pull that off to get the big teal monkey off its back.
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We're Nuts
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RE: FL May Lower Bid Fo YX

Sun Jul 29, 2007 11:26 am

I believe the owner of the Bucks or the Brewers was quoted as saying "before AirTran buys Midwest, I'll buy Midwest." Probably just talk, but it makes a humble employee feel loved.
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SkyexRamper
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RE: FL May Lower Bid Fo YX

Sun Jul 29, 2007 12:37 pm

Quoting We're Nuts (Reply 9):
I believe the owner of the Bucks or the Brewers was quoted as saying "before AirTran buys Midwest, I'll buy Midwest." Probably just talk, but it makes a humble employee feel loved.

It was probably the Buck's owner, US Sentor/Billionaire Herb Kohl, which would actually be a perfect fit for him. He could actually do wonders for the airline if he took it private and invested some of his own money to buy brand new or more planes.
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sllevin
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RE: FL May Lower Bid Fo YX

Sun Jul 29, 2007 8:13 pm

Quoting JBo (Reply 8):
I could see YX trying to pull that off to get the big teal monkey off its back.

They can't afford to go private. I am sure that if they had any ability to do so the current management would do so in order to get rid of those pesky owners trying to tell their employees what to do.

And many of the funds have actually reduced their positions in recent months -- they obviously felt that getting out at the current level was worth it. Lots of individuals will get hammered if FL pulls the offer and the stock drops below $10 -- which, given the lackluster 2nd quarter, is very likely absent a takeover bid.

Steve
 
Indy
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RE: FL May Lower Bid Fo YX

Sun Jul 29, 2007 9:58 pm

Quoting FreequentFlier (Reply 7):
Sorry but newsflash: Without the investors, there is no service. Airlines don't run themselves for free.

The only ones that "invest" are the ones that put up the money for the IPO. The rest are just traders and life would go on without them. Once the IPO goes through the company has the money. Anyone after that doesn't matter. If I go buy $10 million in XYZ company they don't have an additional $10 mil to work with. It means that someone who already had that $10 mil has cashed out. There is no added benefit to the company outside of any shareholders in the company that may have realized a slight increase in the value of their portfolio when the stock went up a fraction of a point with my purchase. But even then it won't matter until they sell.
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ikramerica
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RE: FL May Lower Bid Fo YX

Sun Jul 29, 2007 11:49 pm

Quoting Indy (Reply 12):
The only ones that "invest" are the ones that put up the money for the IPO. The rest are just traders and life would go on without them.

Not true at all.

Investor money comes from IPO, from banks, etc. Companies hold back a lot of stock, so they can offer more shares later if needed. They also can buy back stock. Founders can hold a large number of shares to compensate for the money the invested. Venture capitalists gain rights to stock pre-IPO. The company can give options as incentives to employees in lieu of cash which later are converted and sold. If a company is private, such incentives are much less valuable to the employee, and benefits are more often given in cash.

Without this public market in your stock, your options are very limited. The day to day investor is a vital part of this system to "make a market" in your stock, keeping all these options open.
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surfdog75
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RE: FL May Lower Bid Fo YX

Mon Jul 30, 2007 12:27 am

Quoting Ikramerica (Reply 5):
Public companies are just that, public. If someone wants to offer to buy all the shares, that is part of being a public corporation. By floating your stock out there and raising funds, you take this risk. If you don't want to be bought out, go private. Then you can refuse to sell no matter how stupid the position is...

I'm aware of the hazards of being a public company. The problem I see is when the potential acquirers make it very difficult for the target company to execute its business plan and harm its business for their own gain. The hedge funds trying to turn a quick profit have no interest in either company's business plan but massive amounts of time must be devoted to their concerns. The constant press releases from Airtran commenting on Midwest's business plan/results are childish and most likely harm Midwest's business. In the end the target company has to devote so many resources to the takeover that its business suffers and the employees are ultimately the losers. My point was that I think there needs to be limits on the acquiring entities ability to negatively affect the target company's business while they attempt the hostile takeover.
 
MaverickM11
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RE: FL May Lower Bid Fo YX

Mon Jul 30, 2007 1:05 am

Quoting Rumorboy (Thread starter):
AirTran could lower its bid.



Quoting Surfdog75 (Reply 4):
Most of the upset "investors" are hedge funds who purchased Midwest stock right after the Airtran offer hoping to make a quick buck.

Did anyone listen to the earnings call? The management team got ripped a new one by two or three callers who wanted to know how YX plans to generate anywhere near as much value for investors as FL. It struck me that the team did not know this was coming, and did not prepare bullet points to counter the callers; they went into mumble-repeat-and apologize mode. I have to agree with the callers, I don't see how YX's plan is going to be anywhere near as good as FL. That said, I still don't see what FL is going to get from YX but that's just me.
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N911YX
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RE: FL May Lower Bid Fo YX

Mon Jul 30, 2007 4:21 am

Quoting Rumorboy (Thread starter):
That said, I still don't see what FL is going to get from YX but that's just me

Well, asiide from a number of flight crews, who see a takeover as opportunity for new routes to fly, the lesser of my children see it as a not so welcome intrusion by FL. It could be ugly on the ground.
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mke717spotter
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RE: FL May Lower Bid Fo YX

Mon Jul 30, 2007 11:41 am

If FL doesn't extend the bid after August 10, then what happens? Does FL throw in the towel or make another bid later on?
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Indy
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RE: FL May Lower Bid Fo YX

Mon Jul 30, 2007 12:00 pm

Quoting Ikramerica (Reply 13):
The day to day investor is a vital part of this system to "make a market" in your stock, keeping all these options open.

The day to day people aren't investors. They are just traders looking to make a buck. BTW companies don't just toss out shares from time to time to make extra money. Issuing new stock is a huge deal. It isn't quite as big as an IPO but it is pretty major. Then again its only the people that buy the initial sale that are investors. Once the stock has been sold the first time the company has its money. Any exchange of the shares beyond that doesn't matter.
Indy = Indianapolis and not Independence Air
 
citrus1
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 12:29 am

Quoting Indy (Reply 18):
Once the stock has been sold the first time the company has its money. Any exchange of the shares beyond that doesn't matter.

I promised myself i was going to say away from these FL, YX threads, but i have to ask, if what you say is true than who owns the company.
 
sllevin
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 5:49 am

Quoting Indy (Reply 12):
The only ones that "invest" are the ones that put up the money for the IPO. The rest are just traders and life would go on without them

You have the entire paradigm backwards. When they took the company public they traded ownership for cash. When they sold off a majority of the ownership for cash, they also gave up their ability to control the company. That's why some companies -- most famously, Google -- never do such things. In fact, in Google's case, the only stocks publically traded are specifically non-voting, non-controlling equity. They made it clear up front -- no matter how many shares you buy, you can never control the company. That is NOT the case here -- because no one ever would have bought the shares.

The executive management could always attempt to assemble their own monies and buy up control the company. It's happened many many times. But it's not happening here -- what's happening is nothing more than total rebellion.

Quoting Citrus1 (Reply 19):
I promised myself i was going to say away from these FL, YX threads, but i have to ask, if what you say is true than who owns the company.

The stockholders own the company. Totally and completely.

Steve
 
ikramerica
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 6:07 am

Quoting Indy (Reply 18):
The day to day people aren't investors. They are just traders looking to make a buck. BTW companies don't just toss out shares from time to time to make extra money. Issuing new stock is a huge deal.

When did I say they "toss out shares?" But companies do both sell more stock occasionally, and buy back stock occasionally, both important tools for managing your exposure vs. capital needs.

You are trying to oversimplify everything to make it seem like stock is stupid, normal people don't own shares, etc. It's flat out wrong, but why does that matter to you?

I assume you think that all the employees who get stock in their company via compensation and pension funds are just "traders looking to make a buck?"

Quoting Indy (Reply 18):
Once the stock has been sold the first time the company has its money. Any exchange of the shares beyond that doesn't matter.

yes it does. if there is no market for your shares, then your company becomes worthless. if the market for your shares is weak, then it means any minor problems can lead to massive sell offs (assuming you can find buyers at lower prices).

a strong stock price can aid in getting lenders to give you capital. It attracts talent to your company, since they know they will be able to take advantage of performance based compensation via the market.

But it opens you up to takeover. It's part of the risk.
Of all the things to worry about... the Wookie has no pants.
 
Cubsrule
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 10:35 am

Quoting Sideflare75 (Reply 6):
So it was lower than expected.

A large part of the reason it was lower than expected was one-time charges related to dealing with AAI and fuel hedging (something I think we can all agree is a good thing). Not a bad quarter at all.

Quoting MaverickM11 (Reply 15):
I have to agree with the callers, I don't see how YX's plan is going to be anywhere near as good as FL.

For whom? For Wisconsin corporations, it's about more than just the shareholders (rightly or wrongly).
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MaverickM11
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 10:43 am

Quoting Cubsrule (Reply 22):
For Wisconsin corporations, it's about more than just the shareholders (rightly or wrongly).

Doesn't matter what they think if FL thinks they can retain enough of their business
E pur si muove -Galileo
 
Cubsrule
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 10:52 am

Quoting MaverickM11 (Reply 23):
Doesn't matter what they think if FL thinks they can retain enough of their business

The more germane question is whether MEH's BoD thinks that FL can retain enough of the business (after all, they are the ones that have the statutory obligation to consider parties other than shareholders).
I can't decide whether I miss the tulip or the bowling shoe more
 
CitrusCritter
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 11:04 am

Quoting Cubsrule (Reply 22):
For whom? For Wisconsin corporations, it's about more than just the shareholders (rightly or wrongly).

About 10 or 12 other states have a similar law. It is not carte blanche for the board to hijack the company from its owners. It's getting really old, you always leaning on the stakeholders law. When Octavian or another investor files a lawsuit, YX is essentially going to have to prove that FL's plan is so disingenuous that it will fail miserably. As is, there is no group of stakeholders except Tim H. that will not benefit from the FL plan. The anti-takeover law is absolutely not an end-all, be-all where all the board has to say is "we think this is bad for Appleton, so we're going to ignore the company's owners."

I understand that you love YX and you don't want them to be merged into AirTran. Unfortunately, business is business, and Midwest knew a takeover was a risk when they went public. They incorporated in Wisconsin to take advantage of its anti-takeover law, but it provides, at best, temporary cover to fight off a merger. Once 60%+ of the company's owners have spoken and replaced a third of the board, that anti-takeover law is not going to be sufficient unless the YX Board can truly prove that FL will fail the YX stakeholders miserably. And keep in mind, just because Appleton (or Rhinelander or whatever little city) might lose service under FL won't be sufficient to block the merger.

[Edited 2007-07-31 04:12:56]
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travatl
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 11:28 am

At AirTran, whenever we see

A) A YX MD80 - we refer to it as our new "Charter Division".

B) A YX 717 - somebody inevitably says "ooooooooh.... one of our newest aircraft".

C) A YX ticket counter or gate, everybody on the crew dares everybody else on the crew to be the first one to staple the first teal swatch to the wall.

Point being? No, we're not asses, we've resigned ourselves to the merger. Despite the fact that our senority levels will PLUMMET (I'm in the top 100, I can kiss that b-bye). This is gonna happen - growth is good. It makes us more defensible, better positioned, and more flexible (and I was NOT a fan of this initially). In the words of Kirstie Alley in "Drop Dead Gorgeous" (with that famous midwest accent), let's all just "come on down and have some coffee and bars", and work this thing out.

BTW - I did finally listen to the MEH webcast... gulp - I almost felt sorry for Timmy.
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Cubsrule
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 11:30 am

Quoting CitrusCritter (Reply 25):
It is not carte blanche for the board to hijack the company from its owners. It's getting really old, you always leaning on the stakeholders law... When Octavian or another investor files a lawsuit, YX is essentially going to have to prove that FL's plan is so disingenuous that it will fail miserably

Do you have some case law that suggests the weight that the BoD is supposed to place on various interests (I know I asked you once in the previous thread, but I thought I'd give you another shot in case you didn't see it)? The statute certainly doesn't say it explicitly, and I haven't seen any case law to suggest that this is the case. I'd hop on Westlaw and play law student, but I don't have access over the summer.

Quoting CitrusCritter (Reply 25):
I understand that you love YX and you don't want them to be merged into AirTran.

Not at all. I enjoy flying YX (as, I think, do most who are in favour of the merger). But I don't live in Chicago anymore, I don't really fly either YX or FL, and I'd hardly fly the merged carrier simply because much of my air travel is between St. Louis, Nashville, Charlotte, and Chicago (north side). I just think that FL will fail in MKE, and that would seem to make the merger bad news for all involved.
I can't decide whether I miss the tulip or the bowling shoe more
 
travatl
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 11:41 am

Based on the number of full-fare business class, and A2B Corporate accounts I'm seeing coming aboard on MKE flights these days (all destinations), I think AirTran will do quite well as the dominant hub carrier there. Don't know how, but clearly the airline has made some inroads into the business community. (Especially by the looks of those A2B accounts).
1 Interview. 24 years. 3 Airlines.
 
CitrusCritter
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 11:47 am

Quoting Cubsrule (Reply 27):
I'd hop on Westlaw and play law student, but I don't have access over the summer.

Same situation for me. Remind me in a few weeks and I'll see what I can find. I can guarantee you that the anti-takeover provision will be litigated. It does not allow the Board to be taken at face value and simply say "this is bad for this stakeholder community, so we're ignoring the owners." In order for the anti-takeover law to be sufficient, they will need to prove that MKE will be failed by FL. That's near impossible to prove -- one competing study against another. I think it's clear that the only thing that can save YX at this point is the poison pill.
- CitrusCritter
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MaverickM11
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 11:50 am

Quoting Travatl (Reply 26):
BTW - I did finally listen to the MEH webcast... gulp - I almost felt sorry for Timmy.

I can't believe Tim didn't see that coming a mile away; it's embarassing. It shows what an uphill battle YX is fighting.

Quoting Cubsrule (Reply 24):
The more germane question is whether MEH's BoD thinks that FL can retain enough of the business (after all, they are the ones that have the statutory obligation to consider parties other than shareholders).

Ultimately the YX BOD has to give a convincing argument as to why any offer should be accepted/rejected. They have yet to do so (in a remotely convincing way) in the face of the FL bid.
E pur si muove -Galileo
 
sideflare75
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 11:58 am

None of that will matter next year when the next round of board member elections takes place though. Out will go the poison pill, the Wisconsin anti-takeover law will be waived and the papers will be signed as soon as the new board members get sworn in.
 
CitrusCritter
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 12:00 pm

Quoting Sideflare75 (Reply 31):
None of that will matter next year when the next round of board member elections takes place though. Out will go the poison pill, the Wisconsin anti-takeover law will be waived and the papers will be signed as soon as the new board members get sworn in.

That assumes FL will keep it up that long. At some point it will become a major distraction...the family drama that won't ever end. Perhaps Timmy's just hoping he can sit patiently and Joe will go away. I wouldn't say it's beyond belief. FL could simply decide there are some places like MIA, STL, IND, perhaps a western city etc. that could use more FL service, not to mention just building MKE up on their own.

[Edited 2007-07-31 05:01:02]
- CitrusCritter
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N353SK
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 12:04 pm

To all of those who oppose the merger because they are fond of YX's product, heritage, etc:

It is important to understand that Midwest air group is not some idealistic airline that should only focus on a small group's vision of what they believe the airline should be. Midwest Air Group is owned by the shareholders, not the infamous Mr. Hoeksema. As Midwest Airlines is a publicly owned airline, it is in the business of making money for the shareholders. Any actions in the airline industry are a result of YX being in the business of making money. Sure, it may not be idealistic for a.netters, but any public corporation should only be concerned with making money for its shareholders, even if that means selling the company.

Sure, it would be sad to see them paint YX's pretty blue 717s white and teal and slap a giant elton john on the side, but it's the way the world works.



On another note: I think that FL lowering its offer would be the nail in the coffin for YX, as many investors would wind up kicking themselves for not taking the higher offer and bailing out before they lost any more money.
 
CitrusCritter
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 12:13 pm

Quoting N353SK (Reply 33):
717s white and teal and slap a giant elton john on the side

It was tan & teal for Elton John.  Wink I have a model of that plane...actually flew on the real bird a few weeks ago! Elton's not on the side anymore, but that livery was pretty cool!
- CitrusCritter
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Cubsrule
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 12:16 pm

Quoting CitrusCritter (Reply 29):
I can guarantee you that the anti-takeover provision will be litigated. It does not allow the Board to be taken at face value and simply say "this is bad for this stakeholder community, so we're ignoring the owners."

Definitely true. But as you've pointed out above, there is some sort of burden of concern for stakeholders, -- a term which in itself isn't very well defined in the statute IIRC (I don't have it in front of me). Let's consider an extreme example...

Say Jonathan Ornstein decides he needs some 712s to expand Go in Hawaii. He offers $50 per share, cash, for MEH. But, he makes it clear that he'll be abandoning YX's current operation, as he tells everyone that it's a plane grab. He'll pay employees if he has to and maybe even allow some to move to Hawaii, but there will be no YX anymore. This is a situation the statute is designed for, but if the board cannot simply be taken at face value, you seem to be suggesting that they could not block this sort of acquisition. That doesn't make sense to me.
I can't decide whether I miss the tulip or the bowling shoe more
 
CitrusCritter
Posts: 796
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 12:22 pm

Quoting Cubsrule (Reply 35):

No, no, I completely agree with you in the scenario your bring forth. What I disagree with is that the anti-takeover provision could be used to block ad infinitum a legitimate acquisition of YX in which the stakeholders in Wisconsin should benefit. Even if you as an individual believe FL will fail in MKE, you must admit that what they are proposing is not the least bit similar to your scenario. FL has made a legitimate offer for the company and their filings show intent to maintain and grow service at Milwaukee, to the benefit of the vast majority of stakeholders.

Edit - I reread your post again and saw your reference to my "at face value" assertion. What I mean by that is that YX has been saying that FL can not support the capacity they propose at MKE and will just pull out after failing, leaving MKE all the poorer. The Board saying this can not be taken at face value and accepted as legitimate reason to block the merger without any other consideration, especially of the claims made by FL. The YX board will have to prove these assertions when this is eventually litigated; that is the point I mean to make.

[Edited 2007-07-31 05:29:30]
- CitrusCritter
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Cubsrule
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 12:28 pm

Quoting CitrusCritter (Reply 36):
FL has made a legitimate offer for the company and their filings show intent to maintain and grow service at Milwaukee,

Is asserted intent enough? If (in my above example) everything stays the same but Ornstein says that he wants to keep the route structure intact, what happens?
I can't decide whether I miss the tulip or the bowling shoe more
 
travatl
Posts: 1946
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 12:29 pm

Quoting CitrusCritter (Reply 32):
That assumes FL will keep it up that long. At some point it will become a major distraction...the family drama that won't ever end.

I disagree. It hasn't been a distraction since it's first public announcement in December - and we've only got 11 months 'till the next shareholders' meeting (if they stall until June like they did this year). Further, does Hoeksama really want this to be his legacy? A stubborn manager, who refused to even discuss the possibility of giving up the reigns, despite the wishes of his shareholders? Then suddenly forced out with no parachute?

As has been pointed out again and again - he, nor can his mgmt team, show how their plan will return more than the AirTran offer. His personal reputation will be/is on the line if he continues to let this thing fester. (And DAMN - the arrogance from the conference call! It was like listening to the Bush Administration).
1 Interview. 24 years. 3 Airlines.
 
CitrusCritter
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 12:36 pm

Quoting Cubsrule (Reply 37):
Is asserted intent enough? If (in my above example) everything stays the same but Ornstein says that he wants to keep the route structure intact, what happens?

You are damned good at sounding like a law professor.  Wink This is where the case law would come in, and I don't have access to any legal research tools at present. With the exception of Sen. Herb Kohl, I don't think there are many doubting the sincerity of FL, for what that's worth. There are certainly those who think they will fail, but not that they intend to fail. The example you offer is intriguing, but it would require a lot more details than we actually could know from a hypothetical. After having spent a few months on this forum, my initial reaction would be to believe the exact opposite of anything Ornstein says, but that, of course, has no legal bearing.  Wink On the other hand, what would necessarily be wrong with Ornstein purchasing YX? Assuming he states that he intends to maintain YX at its status quo, but then liquidates the company to send the 717s to go!, then there could possibly be legal action taken, I should think. SEC reports are not made simply for the sake of reporting, and Wisconsin law could come to bear depending on the merger agreement, case law etc. It's a very complex hypothetical that I'm not the least bit prepared to answer fully without research tools and frankly, without having taken an Acquistions and Mergers class.  Smile

Also, I edited my post after I re-read your query, so you might refresh and look at the edit I made.
- CitrusCritter
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Mainland
Posts: 276
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 12:36 pm

Quoting CitrusCritter (Reply 32):
That assumes FL will keep it up that long. At some point it will become a major distraction...the family drama that won't ever end.

I doubt AirTran will come this far just to walk away. Effectively, they're more than 2/3rds of the way to completion of the deal. They've got all the regulatory approvals in the bag, and a majority of shares tendered. (And with Octavian still buying I wouldn't be too shocked to see the tendered amount increase again) If the Midwest board enters into negotiations and a definitive agreement is stuck, AirTran could close the deal in around, or less than, 60 days -- that's if they get greater than 90% of the shares tendered in the process. Drop the tender, go back to square one.

I have little doubt even if they drop the tender AirTran, Litespeed, or Octavian will nominate their own directors at the next meeting in an attempt to make the deal happen.
You don't need a passport to know what state you're in...
 
Cubsrule
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 12:47 pm

Quoting CitrusCritter (Reply 39):
There are certainly those who think they will fail, but not that they intend to fail.

I guess for me, it's the nagging question raised by someone else in another thread: if AAI is so sincere about this merger, why do they use extremely misleading (and in some cases empirically false) evidence to make their case? Something just doesn't add up here.

Is it enough for the MEH BoD to rebuff the merger with the explanation I just wrote? I'd be surprised if it was. But if AAI is up to something fishy (whether it's intentional or not-- and I'd think it would have to be unintentional because no one running a major corporation is stupid enough to expose himself to that much potential liability intentionally), it starts to look a whole lot like Johnny O. saying one thing and doing another.
I can't decide whether I miss the tulip or the bowling shoe more
 
CitrusCritter
Posts: 796
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 12:51 pm

Quoting Cubsrule (Reply 41):
Something just doesn't add up here.

How can you quantify the "Southwest Effect" until it takes place? It's impossible to use historical data to show how a market will grow in the absence of the unique conditions (LCC pricing on non-stop flights) required to generate that effect.
- CitrusCritter
Long Live the 717!
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Cubsrule
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RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 12:59 pm

Quoting CitrusCritter (Reply 42):
How can you quantify the "Southwest Effect" until it takes place? It's impossible to use historical data to show how a market will grow in the absence of the unique conditions (LCC pricing on non-stop flights) required to generate that effect.

I agree. That's why I'm puzzled by the fact that AAI feels the need to resort to the use of misleading presentations and (in some cases) incorrect numbers. Seems like they'd say something along the lines of "low fares mean everybody wins" and leave it at that.

The whole thing smells like they're trying to conceal something, and that's really the reason I've been suspicious from the start.
I can't decide whether I miss the tulip or the bowling shoe more
 
2175301
Posts: 1632
Joined: Wed May 16, 2007 11:19 am

RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 1:37 pm

Quoting CitrusCritter (Reply 29):
I can guarantee you that the anti-takeover provision will be litigated. It does not allow the Board to be taken at face value and simply say "this is bad for this stakeholder community, so we're ignoring the owners." In order for the anti-takeover law to be sufficient, they will need to prove that MKE will be failed by FL. That's near impossible to prove -- one competing study against another. I think it's clear that the only thing that can save YX at this point is the poison pill.



Quoting CitrusCritter (Reply 36):
No, no, I completely agree with you in the scenario your bring forth. What I disagree with is that the anti-takeover provision could be used to block ad infinitum a legitimate acquisition of YX in which the stakeholders in Wisconsin should benefit. Even if you as an individual believe FL will fail in MKE, you must admit that what they are proposing is not the least bit similar to your scenario. FL has made a legitimate offer for the company and their filings show intent to maintain and grow service at Milwaukee, to the benefit of the vast majority of stakeholders.

Edit - I reread your post again and saw your reference to my "at face value" assertion. What I mean by that is that YX has been saying that FL can not support the capacity they propose at MKE and will just pull out after failing, leaving MKE all the poorer. The Board saying this can not be taken at face value and accepted as legitimate reason to block the merger without any other consideration, especially of the claims made by FL. The YX board will have to prove these assertions when this is eventually litigated; that is the point I mean to make.

Actually, I believe you have the burden of proof concept completely backwards. Whomever sues Midwest on the issue will be the plaintiff. It will be upon them to provide the burden of proof - beyond a reasonable doubt that the Airtran offer adequately protects or compensates the stakeholders of Midwest Airline; and that Midwest Airline does not have a viable future that provides value to those stakeholders other than via merger with Airtran. There are a lot of If's involved on to what degree the stakeholders need to be considered. However, the burden of proof will be on whomever sues Midwest on this. Midwest gets to play defense - and wins unless the parties suing them proves their case.

I am not sure that those investor groups are going to jump that fast into court given that they have the burden of proof and the collection of misstatements in the Airtran presentation- which legitimately raises questions as to the viability of the Airtran operations in the future just due to the fact that someone else has to redo the presentation to show what the apple to apple comparison is (there were several post about these issues in the long locked thread that I am sure you can find). Airtran would be in a stronger position if they had kept all comparisons and data sets on equal footing (of course, their offer would not have looked as good either). Just another hurdle to be overcome in a courtroom - and it sure gives Midwest something to really point out (like if the offer was so good - why did they need to use misbalanced data in their presentation).

You are of course right in that the anti-takeover provisions of Wisconsin law do not make it impossible. But it forces the process to take years. If the deal is really good for now for all concerned. It will be good next year, and the year after.

As for those hoping that another election of more board members may seal the deal for Airtran. It might not work that way. What if the new directors decide that the Airtran offer does not properly serve the stakeholders of Midwest (which they are required to consider). Hmmmm.....

Personal opinion here: I'm not really sure that an Airtran takeover of Midwest really even makes a good business case, and believe that it will end up hurting Airtran long term. I believe that this is really more about an ego battle than anything. Airtran does not like someone telling them no. They do not need Midwest to establish the key routes they want - there is really nothing stopping them from doing so. If they are correct on the number of people who will switch to save a few dollars on a ticket... Then they may well drive Midwest out of business (I don't believe it would happen though).
 
Indy
Posts: 4895
Joined: Thu Jan 20, 2005 1:37 pm

RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 8:18 pm

Quoting Travatl (Reply 28):
Based on the number of full-fare business class, and A2B Corporate accounts I'm seeing coming aboard on MKE flights these days (all destinations), I think AirTran will do quite well as the dominant hub carrier there. Don't know how, but clearly the airline has made some inroads into the business community. (Especially by the looks of those A2B accounts).

If MKE is so appealing why hasn't FL ramped up service there? They still treat it like its any other station. If it was so valuable why don't we see LAX, SFO, PHX, BOS, LGA, DFW or any other route? Is the only way they are remotely interested in MKE is if they can have YX?

If that is a case I wouldn't put a great deal of faith in them keeping a high level of service after the merger.
Indy = Indianapolis and not Independence Air
 
Mikey711MN
Posts: 1248
Joined: Fri Nov 07, 2003 4:19 am

RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 10:32 pm

Quoting Indy (Reply 45):
If MKE is so appealing why hasn't FL ramped up service there? They still treat it like its any other station. If it was so valuable why don't we see LAX, SFO, PHX, BOS, LGA, DFW or any other route? Is the only way they are remotely interested in MKE is if they can have YX?

The simplest answer is opportunity costs: it would cost FL far less to acquire YX and run these routes vis-a-vis competing against them for market share.

On that note, FL felt that they were able to compete for business effectively on MKE-LAS, and thus they've started the route. Conversely, I would venture a guess and say that LGA and BOS would be the last to have service added due to the heavy entrenchment of YX on those routes by comparison.

Furthermore, it probably would not make for good PR for FL to blanket the route network that YX has established with competing service, that is, YX has tried to spin this as being the victim of big, bad FL taking them over. A service expansion like this would only exacerbate this IMHO.

Per your last question, I have addressed this in previous YX-FL threads, but it bears repeating: YX has been successful in the MKE market due to Milwaukeeans being, as a rule, both brand loyal and value conscious. I believe that the success of this acquisition relies, in large part, to shifting this brand-loyalty and value-consciousness to the merged airline, that is, by a smooth, incentive-based integration of FF programs, expansion of the A2B program, etc. for Milwaukeeans to continue to board FL flights post-merger.

-Mike

P.S. A note to the group at large: this thread has been remarkably well-behaved compared to prior YX-FL threads, and has resulted in some really solid discussion loaded with interesting comments and perspectives. Let's hope that keeps up!
I plan on living forever. So far, so good...
 
CitrusCritter
Posts: 796
Joined: Wed May 30, 2007 10:36 am

RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 11:23 pm

Quoting 2175301 (Reply 44):
Actually, I believe you have the burden of proof concept completely backwards. Whomever sues Midwest on the issue will be the plaintiff. It will be upon them to provide the burden of proof - beyond a reasonable doubt that the Airtran offer adequately protects or compensates the stakeholders of Midwest Airline; and that Midwest Airline does not have a viable future that provides value to those stakeholders other than via merger with Airtran. There are a lot of If's involved on to what degree the stakeholders need to be considered. However, the burden of proof will be on whomever sues Midwest on this. Midwest gets to play defense - and wins unless the parties suing them proves their case.

Octavian won't be suing to overturn the stakeholder law, but rather to enjoin the board to follow their fiduciary duties. By definition, you are correct -- Octavian etc. must show that the Board has failed in the fiduciary duties, but if YX is going to claim the stakeholder law as protection, they will have to prove their case to that end in order to justify the defense. It will be very complex litigation and the case law, which neither CubsRule or I have access to at present, will be very important in establishing the weight of the board's widely accepted fiduciary duty to the owners versus the duty to the stakeholders. I just find it very hard to believe that without a compelling case that FL will fail that the stakeholder concern can win out against the widely accepted fiduciary duties that any board must discharge.
- CitrusCritter
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DAYflyer
Posts: 3546
Joined: Wed Sep 08, 2004 9:35 pm

RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 11:36 pm

Quoting FreequentFlier (Reply 1):
While I was highly skeptical at first, it does seem inevitable now that YX will be taken over by FL.

With F9's recent woes, I wouldn't be surprised to see an offer by B6 for them either. Ironically, the consolidation of US airlines may end up coming from the LCCs!

I think in terms of future growth and networks, FL would be wise to buy F9 since DEN holds far more potential than MKE; but alas the fleets and cultures are a big mismatch though.

Quoting N353SK (Reply 33):
On another note: I think that FL lowering its offer would be the nail in the coffin for YX, as many investors would wind up kicking themselves for not taking the higher offer and bailing out before they lost any more money.

Which is exactly the point of FL doing so; the investors will bail on YX like rats off the Titanic, and the merger will consumate very quickly.
One Nation Under God
 
CitrusCritter
Posts: 796
Joined: Wed May 30, 2007 10:36 am

RE: FL May Lower Bid Fo YX

Tue Jul 31, 2007 11:43 pm

Quoting DAYflyer (Reply 48):
FL would be wise to buy F9 since DEN holds far more potential than MKE;

DEN > MKE sure. MKE doesn't have WN and UA battling it out in a gigantic nuclear war. I have no idea why anyone would want to buy into the mess that is DEN. I don't think FL could be very strong at DEN at this point -- they are not well known out west; they are very much an east coast/midwest airline.
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