Midwest Disagrees, Stands Behind Its Current Board

AirTran Holdings Inc., operator of low-cost AirTran Airways, announced the recommendations of two shareholder advisory firms Monday in an effort to garner support for its hostile takeover attempt of Midwest Air Group, Inc.

The firms recommend Midwest Air Group shareholders replace a few members of their board of directors with a slate nominated by AirTran. The announcement comes just days before Midwest is to hold its shareholder meeting on June 14 in Milwaukee, according to the Associated Press.

Midwest wholeheartedly disagrees with the recommendations.

"Midwest's incumbent directors have a deep understanding of the company and the potential of its strategic plan, and have proven their commitment to fulfilling their fiduciary obligations," Midwest Chairman and Chief Executive Officer Tim Hoeksema said.

Midwest's board has assumed the stance of across-the-board rejection of all the offers, contending the company would be more profitable by itself.

Since takeover offers were made public, the operator of Midwest Airlines announced a partnership with Northwest Airlines that allows the carriers to sell each other's seats.

Glass Lewis and Co., one of the advisory firms, said it doesn't see that Midwest's board has acted in the best interest of the shareholders. Its recommendation was to place two of AirTran's nominees on Midwest's boards.

Institutional Shareholder Services, the other firm involved, essentially concurred, but said three board members should be replaced. The firm contends the alternate slate of directors could help Midwest see its options more objectively. It also recommended Midwest enter into talks with AirTran.

AirTran claims more than half of Midwest's shareholders have already agreed to tender their shares.

"We are confident that once the new directors are elected, they will add a powerful voice inside the Midwest boardroom and urge their fellow directors to behave fairly and consider all options and opportunities for the company in the interests of all shareholders," AirTran Chairman and Chief Executive Officer Joe Leonard said.

As ANN reported, Midwest has been fighting Air Tran's attempt to contact their shareholders directly for some time. In January, AirTran accused Midwest of interfering with an effort to take its merger message to Midwest's shareholders by not releasing a shareholder list -- something that's required by a New York state law.

The carrier went so far as to request intervention from New York's highest court, wanting Midwest to show cause why it isn't complying with New York law.

AirTran's most recent cash and stock tender offer are worth about $389 million and expires Friday. Air Tran is quite tenacious in this matter. Their initial offer was $78 million -- in 2005.

FMI: www.airtran.com, www.midwestairlines.com