sxf24
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 1:24 pm

Quoting MUWarriors (Reply 96):

The pertinent line there is in addition to. So it is not shareholders above all, it is shareholders + stakeholders. If shareholders always came first a stakeholder law would be useless. Think about it, what purpose would a stakeholder law have if the shareholders could always trump it?

"In addition to," means quite simply, following the interest of the shareholders. MEH is not a charity and the fiscal duty of the directors and officers is to the corporation, which by legal definition, consists of the shareholders. After the shareholders' interest is met, the stakeholders should be considered.
 
Indy
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 1:25 pm

Quoting Tugger (Reply 98):
My goodness, I didn't know you were in the boardroom. I certainly can;t say that I know exactly what documentation has been created for this but I guess you do! Cool!

Previous discussions on this site have refered to YX accepting the $16 per share offer. Checking the YX website that would be a misleading case. The official YX press release states they have unanimously voted to pursue the offer which in that case would be a completely different. A pursuit of an offer is not a binding offer to sell while an acceptance of an offer is. And on the documentation issue you really don't know much about business do you?
Indy = Indianapolis and not Independence Air
 
sxf24
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 1:26 pm

Quoting Indy (Reply 97):
Based on previous discussions on this site the board voted unanimously to accept the offer. The discussions didn't say they voted to pursue the offer. The only way YX could back out is if they had an agreement (written or implied) that permitted such a move. If such a provision existed then a fee would apply I'm sure. It doesn't have to state the term "contract" for a court to see it as such.

To be blunt, previous discussions are meaningless. The regulatory filings disclose a vote to pursue, not accept.
 
sxf24
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 1:27 pm

Quoting Tugger (Reply 95):
Welcome to A.net Sxf24! And thanks for the simple, clear, relevant comments.

Tug

Thank you and you're welcome.
 
Indy
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 1:34 pm

Quoting Sxf24 (Reply 102):
The regulatory filings disclose a vote to pursue, not accept.

Correct. And I just checked the YX press releases and they say pursue and not accept as well. Huge difference.
Indy = Indianapolis and not Independence Air
 
MUWarriors
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 1:44 pm

Quoting Tugger (Reply 98):
Wrong. The pertinent WORD is "may". They are not required to consider all the other points you included, they are just allowed to if they wish. I agree that if they do not hold shareholder concerns first and foremost they "may" be sued.

They most assuredly can be sued, no question, nor do the have to look after the interest of the stakeholders, heck if they incorporate without a stakeholder policy they can't use this as an out. However, MEH can in fact use stakeholder interest in a court as a reason for rejecting a bid.

Quoting Sxf24 (Reply 100):
"In addition to," means quite simply, following the interest of the shareholders. MEH is not a charity and the fiscal duty of the directors and officers is to the corporation, which by legal definition, consists of the shareholders. After the shareholders' interest is met, the stakeholders should be considered.

First off quote the whole passage, and a reads differently:
"In discharging his or her duties to the
corporation and in determining what he or she believes to be in the
best interests of the corporation, a director or officer may, in addi-
tion to considering the effects of any action on shareholders, con-
sider the following:..."
The addition too is not "following the interest of the shareholders," if it were it would be worded in such a way that shareholders were held above stakeholders, not in addition to them (ie. After the interest of the shareholders is met...). MEH is not a charity, however, if they incorporate in the state of Wisconsin saying they may take stakeholders interests into account it is a defense they can use in court. This is why it is considered a hostile takeover defense. Shareholders can, and will sue over this, but if a company (in this case YX) can say "we stated in our articles of incorporation to take stakeholder interests into account, and that is why we feel the need to go against the wishes of the shareholders," it is up to the court to decide the validity of that statement. Neither shareholders or stakeholders hold a trump card in this battle, and it all comes down to judges and lawyers.
 
billreid
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 1:54 pm

Quoting Mke717spotter (Reply 33):
Seems to me like Joe is starting to become a cry baby over the matter. Can't make up his dang mind. TPG/NW didn't come this far to have FL swoop in with a slightly higher offer and win it all, I'm positive that they will increase their bid as well. There's only so much that FL can/wants to put on the table.

You couldn't be more wrong.
TPG has no interest in YX other than financial. AirTran has both financial and strategic interests.

While it can be harsh to be bought out, I find those supporting a company whose only interest is financial very shortsighted and foolish. There is nil interest in the YX employees from TPG or NW.

Why does every UNBIASED individual say the best deal for YX is the FL deal. Why, because FL delivers the best employment security to YX. NW's activities are defensive in nature, with the intent of controlling competition. FL has the intent of growing and if that includes YX that is superior to anti-growth.

I fail to see why any person on airliners.net would support an anti-airline position, would support anything that is anti growth? Perhaps those who support this position should think things through carefully.
Some people don't get it. Business is about making MONEY!
 
Indy
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 2:03 pm

Quoting BillReid (Reply 106):
Why, because FL delivers the best employment security to YX.

Everyone hopes. In the perfect world it is employment security to YX. That is provided FL's intentions are honorable. What if FL really plans on gutting the airline and taking all that equipment and spreading it across their network? People will ask why they would pay so much? What is the value of getting all that equipment right now versus having to wait for years? I ask is the MKE market worth nearly $450 mil? Especially when you consider how much business YX really did in MKE. It just seems fishy.
Indy = Indianapolis and not Independence Air
 
Super98
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 2:24 pm

TPG can easily afford to outlast FL several rounds if they want to pull this. Sounds like additional sour grapes.
I don't think FL really believes the company is worth this much - just making TPG pay more than thye wanted to
for YX.

YX will only benefit more when TPG settles at a higher number. Then that will help with fleet renewal in a way that Allegiant managed to secure - just on a bit smaller scale.

My $.02
 
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Tugger
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 3:21 pm

Quoting Super98 (Reply 110):
I don't think FL really believes the company is worth this much - just making TPG pay more than they wanted to for YX.

That may very well be true and if so is a smart thing to do. removes cash that otherwise may have been used for the airline. Puts more pressure on Midwest to perform and trust me, TPG WILL make it perform and get a good ROI. Don;t know if it will be good for the airline but it will be good for business..... TPG's that is.

Quoting Super98 (Reply 110):
YX will only benefit more when TPG settles at a higher number. Then that will help with fleet renewal

I don't know why you think it will be better for them to pay more. Its not like they are giving the money to the airline, they are "giving it" to the current shareholders and taking it private. The money will leave Midwest except for any shares that Midwest owns (I don't know how much that is) and the new private owners will need to pony up more cash to make improvements and Midwest will have to produce even more money to make that investment pay a sufficient return.

Tug
I don’t know that I am unafraid to be myself, but it is hard to be somebody else. - W. Shatner
Productivity isn’t about getting more things done, rather it’s about getting the right things done, while doing less. - M. Oshin
 
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JBo
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 3:54 pm

Quoting BillReid (Reply 106):
TPG has no interest in YX other than financial. AirTran has both financial and strategic interests. ... There is nil interest in the YX employees from TPG or NW.

Why does every UNBIASED individual say the best deal for YX is the FL deal. Why, because FL delivers the best employment security to YX. NW's activities are defensive in nature, with the intent of controlling competition. FL has the intent of growing and if that includes YX that is superior to anti-growth.



Quoting Indy (Reply 107):
Everyone hopes. In the perfect world it is employment security to YX. That is provided FL's intentions are honorable.

1. TPG has a history of investing in airlines and reorganizing them into successful operations. CO and HP have been mentioned several times. If TPG put the effort to organize these companies into successful operations, that must put out some sort of interest in the employees to ultimately give them job security down the road.

2. Stated before, as a Skyway outstation employee, what employment security is there with FL? FL has not had success with a regional operation. Under TPG's reorganization, Skyway would be more likely to stay intact as the regional arm is an integral part of Midwest's operation. Therefore, my employment seems much more secure with TPG than with FL.
I'd take the awe of understanding over the awe of ignorance any day.
 
n917me
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 6:15 pm

Quoting Indy (Reply 107):
Everyone hopes. In the perfect world it is employment security to YX. That is provided FL's intentions are honorable

And you can you please show me proof that FL intentions are honorable????
- Joe and Co have stated and distributed press releases stating that they are withdrawing their YX bid.
----- Next day, they come out and up thie bid. yes it is business, however he went back on his word, Honorable, no. Businesslike... maybe.

- Yesterday in the ATA smartbrief it was reported that Bob Fornaro reported that FL the compnay will proceed with its plans for a slow expansion....
--------- making yet another hostile attempt at YX does not sound like "slow growth" honorable to his word? no.

FL has not communicated to any YX employee that he or she is "safe". Yeah, they have said all employees will have a job, however no one has mentioned what type of job, or where it will be offered. Sure, you can have a job, but you need to relocate to ATL.....at your own expense,, ohhh, you were making XX.XX per hour, you will now take a pay cut too... But were are honorable and are offering you a job...

All this back and forth crap has done nothing but make a majority of YX employees bitter and fed up with FL. Not to mention a good chunk of passengers.


** so what I see is a desperate FL whos alternate business plan without YX must have some serious flaws, or FL would not have came back at the last minute with another "final" offer. If anything, if I recall correctly, Joe does not have warm fuzzy feelings for NWA. In fact, If I were walked off my job, I wouldn't have warm fuzzy feelings for them either. I think FL is scared of NWA and some of it is personal.


SOUR GRAPES
 
sxf24
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 9:29 pm

Quoting MUWarriors (Reply 105):
First off quote the whole passage, and a reads differently:
"In discharging his or her duties to the
corporation and in determining what he or she believes to be in the
best interests of the corporation, a director or officer may, in addi-
tion to considering the effects of any action on shareholders, con-
sider the following:..."
The addition too is not "following the interest of the shareholders," if it were it would be worded in such a way that shareholders were held above stakeholders, not in addition to them (ie. After the interest of the shareholders is met...). MEH is not a charity, however, if they incorporate in the state of Wisconsin saying they may take stakeholders interests into account it is a defense they can use in court. This is why it is considered a hostile takeover defense. Shareholders can, and will sue over this, but if a company (in this case YX) can say "we stated in our articles of incorporation to take stakeholder interests into account, and that is why we feel the need to go against the wishes of the shareholders," it is up to the court to decide the validity of that statement. Neither shareholders or stakeholders hold a trump card in this battle, and it all comes down to judges and lawyers.

Regardless of how you read the statue, the interests of shareholders and stakeholders are not equal. As a publicly traded corporation, YX has a duty to shareholders that CAN NOT be disregarded. Furthermore, the directors are employed solely at the pleasure of the shareholders. If they are found to have disregarded this duty, they won't know what hit them...

Quoting JBo (Reply 110):
1. TPG has a history of investing in airlines and reorganizing them into successful operations. CO and HP have been mentioned several times. If TPG put the effort to organize these companies into successful operations, that must put out some sort of interest in the employees to ultimately give them job security down the road.

TPG has a history of aggressive reorganization - not benevolent investment. Any additional funding for YX will likely come from leveraging the company with outside debt.
 
sxf24
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 9:35 pm

Quoting N917ME (Reply 111):
And you can you please show me proof that FL intentions are honorable????
- Joe and Co have stated and distributed press releases stating that they are withdrawing their YX bid.
----- Next day, they come out and up thie bid. yes it is business, however he went back on his word, Honorable, no. Businesslike... maybe.

The statements were in regards to the 1/11/07 offer, which did expire. Joe never said anything about another offer.

If you want to talk about honorable, ask the pilots at AL how well the Cookie Palace has kept their promises to them...

Quoting N917ME (Reply 111):
FL has not communicated to any YX employee that he or she is "safe". Yeah, they have said all employees will have a job, however no one has mentioned what type of job, or where it will be offered. Sure, you can have a job, but you need to relocate to ATL.....at your own expense,, ohhh, you were making XX.XX per hour, you will now take a pay cut too... But were are honorable and are offering you a job...

FL can't really tell employees of a company that they don't yet own specifically what type of jobs they will have since they don't have access to payroll or other specific information. In addition, until the transaction is closed, FL's public communication is highly restricted by securities law.
 
n917me
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 10:02 pm

Quoting Sxf24 (Reply 113):
The statements were in regards to the 1/11/07 offer, which did expire. Joe never said anything about another offer.

AirTran said late Sunday that it had allowed its proposal to expire, ending its two-year pursuit of Midwest. The bid had support from 62.7% of Midwest shareholders, who had agreed to tender shares. -- quoted from "the street.com" on SUNDAY AUGUST 12, 2007.
 
mkirch72
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 10:17 pm

Quoting JBo (Reply 34):
Not according to Wisconsin State Law, which mandates fair consideration of all stakeholders in such instances ... that means not only shareholders, but employees, passengers, communities, more or less anyone whom Midwest has an impact upon.

Show me any M&A activity in any arena, in any state, that was halted because of the impact on employees. These laws are smoke and mirrors that protect one thing, and one thing only - corporate interests.

Here's an example in the financial arena -- Bank of America purchased MBNA because MBNA was such a better credit card company and they wanted to adopt their method of doing business, focus on the customer, their high quality employees, etc, etc. It was a $35 billion deal. MBNA was making profits in the billions prior to being purchased! Neither company was suffering --- However -- 6,000 people have been laid off as a result since 2005. They didn't do it all at once --- just little by little, over time, to make it less noticeable.

People need to understand that most (notice I said MOST) publicly owned companies are answerable to one, and only one, thing --- return on investment for the Shareholder!!! Nothing else matters!! Case in point above -- MBNA went from growing 20%+ per year to 10-15% per year. Within a year they were a target for acquisition and purchased by BOA and now 6,000 people lost their jobs.

The same thing will happen with Midwest whether it's Airtran or this new investment group who ends up owning the shop.
 
sxf24
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 10:27 pm

Quoting N917ME (Reply 114):
AirTran said late Sunday that it had allowed its proposal to expire, ending its two-year pursuit of Midwest. The bid had support from 62.7% of Midwest shareholders, who had agreed to tender shares. -- quoted from "the street.com" on SUNDAY AUGUST 12, 2007.

A snippet from the street.com is the basis for calling FL dishonorable?

If you go to the actual source, you'd see Joe said, ""For the good of our shareholders and Crew Members, we have terminated negotiations and allowed our tender offer to expire." At the time the statement was made, negotiations were terminated and the tender offer expired. While he went on to say that FL would move on, he never said they would not make another offer.
 
airtran717
Posts: 590
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 10:42 pm

Quoting Srbmod (Reply 18):
While the BOD unanimously approved the deal, the deal still has to be voted on by the share holders. There's still the governmental reviews of the deal as well.

Bingo.
 
SeeTheWorld
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 10:47 pm

Quoting BillReid (Reply 106):
You couldn't be more wrong.
TPG has no interest in YX other than financial. AirTran has both financial and strategic interests.

While it can be harsh to be bought out, I find those supporting a company whose only interest is financial very shortsighted and foolish. There is nil interest in the YX employees from TPG or NW.

Why does every UNBIASED individual say the best deal for YX is the FL deal. Why, because FL delivers the best employment security to YX. NW's activities are defensive in nature, with the intent of controlling competition. FL has the intent of growing and if that includes YX that is superior to anti-growth.

I fail to see why any person on airliners.net would support an anti-airline position, would support anything that is anti growth? Perhaps those who support this position should think things through carefully

Exactly.

Quoting Indy (Reply 107):
Everyone hopes. In the perfect world it is employment security to YX. That is provided FL's intentions are honorable. What if FL really plans on gutting the airline and taking all that equipment and spreading it across their network? People will ask why they would pay so much? What is the value of getting all that equipment right now versus having to wait for years? I ask is the MKE market worth nearly $450 mil? Especially when you consider how much business YX really did in MKE. It just seems fishy.

Once again, I ask, do you even know what you are talking about? If you knew anything at all about airline strategy and route development, you would know that MKE for AirTran will be a major hub for them and likely will grow much faster with them then without them. If AirTran was only interested in aircraft to spread around the country, they wouldn't bother with YX because they have so many aircraft on order. The fact is they need a MidWest hub and about the only way to get one is to acquire a logical partner - YX is that logical partner. Make no mistake, if FL is able to take over YX, the employees of YX, the residents of MKE, and the tax base of Wisconsin will be far better off.
 
SeeTheWorld
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 10:53 pm

Quoting Super98 (Reply 108):
TPG can easily afford to outlast FL several rounds if they want to pull this. Sounds like additional sour grapes.
I don't think FL really believes the company is worth this much - just making TPG pay more than thye wanted to
for YX.

I assure you that TPG will not be paying any more for this deal - the money will be coming out of NW. The premium that is being paid by the TPG/NW offer is all coming from NW as stated above. TPG would never pay more than the market price. The only reason TPG is involved at this point, since AirTran at $15.75 was probably too rich for TPG, is NW's involvement and their financial support. NW has calculated how much revenue they will lose if AirTran takes over YX and they have thrown in an amount of money that is less than that. AirTran has likely calculated how much it is worth to NW as well, and so they are now just making NW pay at least 50 cents more a share. It's a brilliant strategy by AirTran if they are ultimately going to lose. Basically, AirTran is saying to NW - "You want to stifle competition? Fine, how much is it worth to you."
 
n917me
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Joined: Tue Feb 08, 2005 9:18 am

RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 11:07 pm

Quoting Sxf24 (Reply 116):
you go to the actual source, you'd see Joe said, ""For the good of our shareholders and Crew Members, we have terminated negotiations and allowed our tender offer to expire." At the time the statement was made, negotiations were terminated and the tender offer expired. While he went on to say that FL would move on, he never said they would not make another offer.

So at the time Joe made those comments, it was for the good of all involved, then why 24-36 hours later is it suddenly good to spend even more money on the same transaction??
 
sxf24
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 11:18 pm

Quoting N917ME (Reply 120):
So at the time Joe made those comments, it was for the good of all involved, then why 24-36 hours later is it suddenly good to spend even more money on the same transaction??

I don't know. Why was Tim so adamant about remaining independent one day and completely willing to sell-out the next?

Ultimately, it is about strategy. A successful business will constantly be adjusting its strategy to take advantage of opportunities and market forces.
 
SeeTheWorld
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RE: FL Vs YX..It Aint Over Yet

Wed Aug 15, 2007 11:37 pm

Quoting N917ME (Reply 120):
So at the time Joe made those comments, it was for the good of all involved, then why 24-36 hours later is it suddenly good to spend even more money on the same transaction??

Because, they are making NW pay more to protect the Upper Midwest. It's not that complicated.
 
Mainland
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 12:09 am

News out -- the BoD will meet tomorrow:

Midwest Air Group Board of Directors to Meet August 16 to Consider Alternatives Regarding Sale of Company
http://biz.yahoo.com/prnews/070815/aqw108.html?.v=16

Quote:
MILWAUKEE, Aug. 15 /PRNewswire-FirstCall/ -- In light of developments relating to its consideration of a sale of the company, the Board of Directors of Midwest Air Group (Amex: MEH - News) today said it would meet to consider alternatives on Thursday afternoon, August 16.

There can be no assurance that the board will reach a final decision at that meeting or that any definitive merger agreement will be entered into.
You don't need a passport to know what state you're in...
 
Indy
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 12:53 am

Quoting N917ME (Reply 111):
And you can you please show me proof that FL intentions are honorable????

I don't believe for a minute that their intentions are honorable. I think people hope they are. But it is my OPINION that the intentions are not.

Quoting SeeTheWorld (Reply 118):
Once again, I ask, do you even know what you are talking about?

Yes I do. Do you? With all that hometown loyalty YX couldn't get MKE turned into a major hub. If anything it was nothing more than a major focus city. Maybe you could call it a WN style hub. The MKE market won't support it. It is too close to ORD and MDW. That is why the MKE traffic numbers are so unimpressive. You can add all the flights you want. It won't make passengers magically appear. With fuel prices as high as they are the last thing you really want to do is double handle passengers. You certainly don't want flights heavily dominated by feed. You want as much O/D as possible. The MKE market just won't support a major hub for an airline that barely gets 50% of that market.

Not only does MKE live in the shadow of the Chicago airports they also live under the influence of the traffic patterns. If there are problems in Chicago the flights in MKE can't even take off. I've been there when this has happened. I was going flying MKE-MCI and we couldn't even leave because of ORD traffic. The last thing FL needs is a hub that gets backed up every time Chicago has problems. It is bad enough they run out of ATL and all the delays that happen there any time the weather turns south. You can talk flight numbers and hope all you want. It doesn't change reality.
Indy = Indianapolis and not Independence Air
 
Super98
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Joined: Sun Mar 25, 2007 3:51 pm

RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 12:57 am

Quoting SeeTheWorld (Reply 119):

Aren't they already paying a premium over market at $15.75???

Once again, what percentage does NW actually have in this transaction?

My statement was not evaluative on TPG's diligence and business sense not to overpay. I simply stated that they could well afford to go a few rounds if they really wanted the company. And we know that they have been looking to invest in an airline of late. In fact they were the last remaining serious bidder for the last stake in Alitalia before learning that they too were lied to only to be uncovered during diligence and thus dropped out.

Since you obviously know more than I do about all this, and regardless of previous statements by their management on maximum bids, how much do you think the company is worth to FL?

Cheers,
 
SeeTheWorld
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 1:16 am

Quoting Indy (Reply 124):
With all that hometown loyalty YX couldn't get MKE turned into a major hub

A major hub for AirTran, not a major hub. Don't put words in my mouth. Those are two very different things.

Quoting Super98 (Reply 125):
Aren't they already paying a premium over market at $15.75???

Once again, what percentage does NW actually have in this transaction?

I don't know any more that what I've read, but my past experience in airline planning makes me believe that NW is paying the premium part of this deal because if AirTran moves into MKE, the loss of revenue for NW (over years and years) is going to be very steep. Therefore, it makes sense for NW to pony up a substantial sum of money now to preserve that revenue. So, if they are going to up the bid to win, I suspect it will come out of NW's pocket.
 
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knope2001
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 1:16 am

AirTran's current bid is $10.00 cash plus 0.6056 share of AAI for every MEH share.

If AAI goes to $9.90 per share share, that is the level where the new AAI offer starts to be worth less than $16.00, the amount of TPG's cash offer.


$9.90 * 0.6056 = 5.995
5.995 + $10.00 cash i= $15.995 value of the offer.

How likely is AAI to trade at 9.90 or less? Well, there were below that as recently as 8/7, and they traded down in the 9's for just under two weeks.

Pequot's claim is that the synergies between the two companies will have AAI stock climbing and increase the value futher. Of course that's speculative, and what I'm saying is speculation as well. But how long will it take for AAI to reap the benefits of those synergies *and* have it reflect in the stock price? How much will AirTran's stock price be dogged by for what some will very likely call overpaying for Midwest? AAI themselves, just 20 days ago, said that they doubted Midwest was worth the existing offer on the table. The new offer is higher.

A lot of things go into a stock price, and external events could easily drive AirTran's price down to where the new offer isn't even worth $16.00. A spike in oil, increased instability in the middle east, warning signs of an economic slowdown, can put pressure on AAI. Note how AAI's price was seemingly caught in an industrywide stock slump right after they reported good earnings.. I don't think it's a particularly safe bet that AAI will go up in the short or medium term. Mergers cost money, and

And speaking of earnings, while the most recent Q2 earnings were "record", that was largely due to the company itself being larger than last year. AirTran's annual profit margin has grown disturbingly small in the past few years, and that's a big factor in the stock price doldrums they have seen. AAI has not had good annual returns in spite of what their press releases say, and the costs of acquring and integrating MEH could very easily turn their ink red for a number of quarters before they start to reap the promised benefits. What will that do to their stock price?

And all this says nothing about how they will do financially with their plans for Midwest. That is a separate, more speculative issue.

The certainty of a cash offer is worth something here, and don't be surprised if this process is nowhere as simple or clean as "AAI's offer was higher". With AAI down today, at the moment it translates to a 16.18 per share, not 16.25 per share.
 
SkyexRamper
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 1:35 am

Just because AirTran might have the funds to buy Midwest, will they still have the funds to by Midwest and all those 737s. AirTran will just keep trumping anyone's offer just to drag this out as long as they can. It's very expensive advertising if you ask me. Timmy should just take the P.E offer, keep his job and get a cash infusion to buy some new airplanes. Sure the firm might try to cut jobs, but there really aren't any manual labor jobs to be cut....though some of our dump gate agents could be lost.
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SeeTheWorld
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 1:48 am

Quoting SkyexRamper (Reply 128):
Timmy should just take the P.E offer, keep his job and get a cash infusion to buy some new airplanes. Sure the firm might try to cut jobs, but there really aren't any manual labor jobs to be cut....though some of our dump gate agents could be lost.

Don't think for a moment Timmy's job is secure with the TPG/NW deal.
 
Mikey711MN
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 1:51 am

Because it bears repeating...

Quoting SeeTheWorld (Reply 126):
...NW is paying the premium part of this deal because if AirTran moves into MKE, the loss of revenue for NW (over years and years) is going to be very steep. Therefore, it makes sense for NW to pony up a substantial sum of money now to preserve that revenue. So, if they are going to up the bid to win, I suspect it will come out of NW's pocket.

I couldn't agree more. In essence, we have...

Bid = MEH Market Value + Premium


...and from the TPG/NW arrangement anyway, this becomes...

NW Investment + TPG Investment = MEH Market Value + Premium


Furthermore, NW is ostensibly limited in their amount of investment in other airlines by virtue of their union contracts. To that end, TPG is "limited" by good business acumen to not overpay to acquire a company, be it an airline or anything else. So arguably, the two investors are somewhat fixed in the amounts payable for an acquisition of YX.

Therefore, if NW can't further contribute and TPG won't, it's up to the Board to consider the long-term value of AAI shares and its relevance to future growth, i.e. to exceed a grand total of $16 in combination with the $10 cash.

-Mike
I plan on living forever. So far, so good...
 
SeeTheWorld
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 2:00 am

Quoting Mikey711MN (Reply 130):
Furthermore, NW is ostensibly limited in their amount of investment in other airlines by virtue of their union contracts. To that end, TPG is "limited" by good business acumen to not overpay to acquire a company, be it an airline or anything else. So arguably, the two investors are somewhat fixed in the amounts payable for an acquisition of YX.

Therefore, if NW can't further contribute and TPG won't, it's up to the Board to consider the long-term value of AAI shares and its relevance to future growth, i.e. to exceed a grand total of $16 in combination with the $10 cash.

Excellent point.
 
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mke717spotter
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 2:09 am

If TPG/NW was to increase their bid, would there be some sort of a public announcement like with FL or would they keep it quiet like when they first approached YX with their first offer?
Will you watch the Cleveland Browns and the Detroit Lions on Sunday? Only if coach Eric Mangini resigned after a loss.
 
Indy
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 2:31 am

Quoting SeeTheWorld (Reply 126):
A major hub for AirTran, not a major hub.

And what is the difference in your opinion?
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isitsafenow
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 2:39 am

Quoting SeeTheWorld (Reply 118):



Quoting SeeTheWorld (Reply 119):



Quoting SeeTheWorld (Reply 122):

Most folks here talk airplanes, the paint on them and the routes they fly or should fly. You talk airline business.
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knope2001
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 2:50 am

Quoting Mikey711MN (Reply 130):
Furthermore, NW is ostensibly limited in their amount of investment in other airlines by virtue of their union contracts. To that end,

Any idea of the details of this? All I've seen is that it did not violate the union agreements. That could mean...

(a) It was under a ceiling...dollar amount or percentage limitation of some sort or another. If that is the case, then perhaps NW is indeed capped by the details of their union contracts.

However it could also mean

(b) It was structured in such a way that it did not fall under the limitations of union contracts at all.

If (a) is the case, then they would have a ceiling to stay under. I don't think we know where that ceiling is, but if it exists then it could prevent NWA from increasing their share.

If (b) then Northwest is not limited by their union agreements in this particular matter.


Any good indication which it is, and if it is (a) where the cap might be? For this to be a stumbling block it would have to first not be (b), and then be approaching a ceiling or cap.

One additional fly in the ointment on this. Do we know that TPG and NW are the only two participants in the accepted bid? Not sure I saw that defined as such anywhere to the exclusion of other parties. If it is just the two of them, is there a reason that a new, higher offer could not include additional investors?
 
airtran717
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 3:03 am

Quoting Knope2001 (Reply 135):
If it is just the two of them, is there a reason that a new, higher offer could not include additional investors?

No reason what so ever. It could really get interesting.
 
Mikey711MN
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 3:12 am

Quoting Knope2001 (Reply 135):
Any idea of the details of this?

No, and I'm curious.

Quoting Knope2001 (Reply 135):
That could mean...

(a) It was under a ceiling...dollar amount or percentage limitation of some sort or another. If that is the case, then perhaps NW is indeed capped by the details of their union contracts.

However it could also mean

(b) It was structured in such a way that it did not fall under the limitations of union contracts at all.

Frankly, and this is only my opinion, I can't imagine the union contractual stipulations regarding this issue is not money related. Which would imply, as you concluded in option "a" and I concur, that a ceiling exists.

On that note, I found the leaked 40% figure to be somehow telling in that it was quick retracted. If, in fact, TPG and NW were the only two contributors, Carol herself let the cat out of the bag how much NW put up and, to that end, how close to their ceiling they may actually have been.

You allude to the presence of other suitors, which is a valid question then. It means...

NW Investment + TPG Investment + Other Investment = MEH Market Value + Premium


My thoughts on this are that any suitors--that is, if you buy into my algebraic breakdown of the bid = market value + premium argument--would need to contribute to the premium "term" in the equation. Put another way, TPG Investment = MEH Market Value, therefore...

NW Investment + Other Investment = Premium


Which brings up motivation: who would need to get involved in a counter-bid from the TPG/NW camp who has a vested stake at risk with a merged YX-FL airline?

On that note, extra difficulty to this answer so to surely be able to skirt DoJ concerns: who of those potential investors are not airlines? Who has exposure here?

-Mike
I plan on living forever. So far, so good...
 
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JBo
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 3:21 am

Quoting Mikey711MN (Reply 137):

Which brings up motivation: who would need to get involved in a counter-bid from the TPG/NW camp who has a vested stake at risk with a merged YX-FL airline?

SkyWest?

Quoting Mikey711MN (Reply 137):
On that note, extra difficulty to this answer so to surely be able to skirt DoJ concerns: who of those potential investors are not airlines? Who has exposure here?

Can't think of anything specific ... other than possibly any wealthy Wisconsin businessperson/institution who wants the company to remain.
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Mikey711MN
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 3:29 am

Quoting JBo (Reply 138):
SkyWest?

That's who I thought of too, except my opinion would be that the DoJ would frown on such an arrangement. Can't say for sure...I'm not a lawyer.

Quoting JBo (Reply 138):
Can't think of anything specific ... other than possibly any wealthy Wisconsin businessperson/institution who wants the company to remain.

Typically any "wealthy businessperson" is, in fact, wealthy by virtue of paying less than market value for entities and selling them at a premium, not the other way around. As for individuals, they're typically in the philanthropy business, not in helping out another otherwise viable enterprise.

If anything, NW may be busy trying to convince TPG that YX has more market value than their current "contribution". And they'd have a point in that NW's arrangements with YX do enhance their value. If the existing YX-NW arrangements suddenly became expanded after a hypothetical TPG-NW YX buyout, I think that would be the case.

-Mike
I plan on living forever. So far, so good...
 
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knope2001
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 3:41 am

Quoting Mikey711MN (Reply 137):
Quoting Knope2001 (Reply 135):
That could mean...

(a) It was under a ceiling...dollar amount or percentage limitation of some sort or another. If that is the case, then perhaps NW is indeed capped by the details of their union contracts.

However it could also mean

(b) It was structured in such a way that it did not fall under the limitations of union contracts at all.

Frankly, and this is only my opinion, I can't imagine the union contractual stipulations regarding this issue is not money related. Which would imply, as you concluded in option "a" and I concur, that a ceiling exists.

Hmmm...I think this comes down to how things are interpreted. (Like this is the first thing!) Here's a quote from their press release: http://biz.yahoo.com/bw/070812/20070812005073.html?.v=1

"Northwest has briefed its union leadership on the transaction. The investment contemplated is consistent with all of NWA's union obligations."

I took that to mean "The details of the agreement do not violate any union agreements"
Sounds like you take it as "The details of the agreement are within limits existing in the union contracts"

While similar, the difference is that you see something in there suggesting there are caps and NWA's action is within the limit. I don't see why thta suggests there are caps that apply here any more than it suggests the deal is outside of limitations alltogether, which is my suspcion.

Certainly it is possible there are specified limits. But it seems unlikely to me that the type of limits found in pilot contracts (usually the sticking point) would be limits that allow such a significant investment (perhaps $200m or 40% ownership of another airline) in the first place. Scope clauses and similar limitations found in union agreements (especially pilot ones) usually flatly prohibit certain actions as a way to prevent the company from doing an end-around and farming out pilot work to other carriers. The sort of limitation in a case like that wouldn't allow NW to acquire 40% of Midwest in the first place. Yet the unions did not object. That's why I have doubts there is some ceiling being reached in union contracts that would prevent NWA from going higher. I suspect it is outside of the union limiations completely.

Quoting Mikey711MN (Reply 137):
Which brings up motivation: who would need to get involved in a counter-bid from the TPG/NW camp who has a vested stake at risk with a merged YX-FL airline?

Perhaps some of the parties who formed the other two bids. And that includes local money who, similar to NW, have a heightened interest in MEH than TPG alone would have.

Quoting Mikey711MN (Reply 137):
On that note, extra difficulty to this answer so to surely be able to skirt DoJ concerns: who of those potential investors are not airlines? Who has exposure here?

Not sure I understand the question here...sorry!
 
paladin87
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 3:44 am

Quoting Mikey711MN (Reply 130):
Furthermore, NW is ostensibly limited in their amount of investment in other airlines by virtue of their union contracts

The unions would alter their contracts if they felt a FL-YX merger would harm them and their paychecks it would be in thier best interests not just NW's
 
sxf24
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 3:45 am

Quoting Mke717spotter (Reply 132):
If TPG/NW was to increase their bid, would there be some sort of a public announcement like with FL or would they keep it quiet like when they first approached YX with their first offer?

YX would be required to publicly disclose receipt of the offer.
 
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Tugger
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 3:47 am

How will NW's involvement likely affect YX's future growth? I can't imagine NW would want any growth particularly any that increased competition. How does this work out best for TPG, for NW, For YX? I just don't see it.

And the concept of Northwest paying for the part "above market value" in this deal doesn't make sense. If it goes through NW will own some percentage of YX, will they not? A percentage that TPG won't and so TPG's "portion" will still be below market value. Unless the deal is structured such that NW does not have any vested interest and is effectively just giving the money to TPG with a smile and a promise that it be managed well. If that's the case then if I was an NW shareholder I'd be thoroughly displeased. Now it can't be this simple or bad for NW or someone here would have already pointed this out already but you get what I mean.

Now where I do see it making sense for NW and TPG is if YX becomes weaker and is "parted out". TPG gets the parted out value and NW gets a stronger market share (possibly).

Tug
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quickmover
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 4:02 am

Quoting Tugger (Reply 143):
How will NW's involvement likely affect YX's future growth? I can't imagine NW would want any growth particularly any that increased competition.

The best example would be what happened about 100 miles down the road at MDW. Southwest and ATA were both battling over the same turf (much like YX and NW). WN became an "investor" and codeshare partner in ATA who at the time was the 10th largest carrier in the country.

I haven't heard much out of ATA lately. The few planes they have left pretty much fly where WN tells them to. Oh, by the way, WN initially said they were only an investor and wouldn't exercise operational control. Seems like I've heard another carrier say something like that recently.
 
Crewchief
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 4:09 am

Quoting Tugger (Reply 143):
And the concept of Northwest paying for the part "above market value" in this deal doesn't make sense.

Bingo. The market value is what YX actually sells for, not what someone's opinion of it is. The value to the purchaser may be more or less, but we don't have any evidence that any of the bidders are acting irrationally. We really don't know how much NW contributed, or why. We do have guesses. The fact that some of us accept the guesses as fact doesn't make it so.
 
Mikey711MN
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 4:11 am

Quoting Knope2001 (Reply 140):
Not sure I understand the question here...sorry!

My bad...that was poorly worded, but ironically you came around to addressing it anyway...

Quoting Knope2001 (Reply 140):
Perhaps some of the parties who formed the other two bids. And that includes local money who, similar to NW, have a heightened interest in MEH than TPG alone would have.

In essence, anyone who stands to outright lose money with a merged YX-FL airline has exposure. To that end, I fail to see how anyone in Milwaukee has such exposure vis-a-vis Northwest, a direct competitor and recipient of annual revenues totaling $100M. In fact, the crux of the FL argument is that MKE stands to gain from a merged airline; only then would a certain exposed entity see that as a bad thing.

Frankly, IMHO, the only "exposure" locally is that of a sense of loss of identity for Milwaukeeans. I don't think that translates directly into material losses however.

Quoting Knope2001 (Reply 140):
Scope clauses and similar limitations found in union agreements (especially pilot ones) usually flatly prohibit certain actions as a way to prevent the company from doing an end-around and farming out pilot work to other carriers. The sort of limitation in a case like that wouldn't allow NW to acquire 40% of Midwest in the first place.

Right. So didn't you just talk yourself out of (b) above as being a viable option? Wouldn't such indirect reasoning conclude that "if not (b), then (a)"? I guess this part of your post confused me a bit.

Quoting Knope2001 (Reply 140):
Yet the unions did not object.

Right also. So whatever is in those terms seemed amicable to the union. It's not like they could issue any PR affirming that case because they would go on record as to, at least implicitly, support NW's $180M investment in "another airline".

Anyway, good stuff as usual.

-Mike
I plan on living forever. So far, so good...
 
Mikey711MN
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 4:16 am

Quoting Crewchief (Reply 145):
The market value is what YX actually sells for, not what someone's opinion of it is.

For purposes of my argument anyway, I defined "market value" as what YX would trade for on the open market. If these bids both evaporated tomorrow, do you think that MEH would sell at $14-$15 / share? Hardly.

Therefore there is a component to the total value of MEH that is the tared "market value" and a component of the "premium".

-Mike
I plan on living forever. So far, so good...
 
jmc1975
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 4:18 am

Quoting N917ME (Reply 6):
Its over.. deal is done.. get over it.

AirTran is now offering $445 million for Midwest. It's only going to get more interesting.
.......
 
Indy
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RE: FL Vs YX..It Aint Over Yet

Thu Aug 16, 2007 4:32 am

Quoting Tugger (Reply 143):
How will NW's involvement likely affect YX's future growth? I can't imagine NW would want any growth particularly any that increased competition. How does this work out best for TPG, for NW, For YX? I just don't see it.

I don't believe NW involvement will impact YX growth one way or another. Their only involvement is keeping FL out. My belief is the NW stance on this is that YX doesn't have a rapid growth plan and doesn't pose a threat in the region. They may just want to keep MKE stable as it is. With YX as the dominant carrier you want up tomorrow knowing where things in MKE stand. If FL takes over you have a more difficult time working the market because you don't know whether they will be adding all kinds of flights tomorrow, cutting prices or cutting routes.

Stability in business is good.
Indy = Indianapolis and not Independence Air

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