Midwest Will 'Carefully Consider' Offer

Despite continued reluctance on the part of Midwest Airlines to consider a hostile takeover bid by AirTran Holdings, Inc, parent company of AirTran Airways, that doesn't mean AirTran has given up on its merger offer. On Monday, the company issued the following statement from Joe Leonard, AirTran's chairman and chief executive officer:

"Midwest has said that its board will evaluate carefully AirTran's increased offer which substantially enhanced the latest tender offer of $15 per share for all of the Midwest shares and make its recommendation to investors no later than April 13. We believe that all stakeholders would benefit more from our proposal than from any stand-alone plan that Midwest can support. It is time for the Midwest board to demonstrate its commitment to shareholder value, not to entrenchment, and enter into discussions to learn more about our proposal. 'Just say no' is a slogan, not a way around the board's fiduciary duty, particularly when its primary advisor is being paid a premium to justify remaining independent."

The updated offer was made through Galena Acquisition Corp. which is a wholly owned subsidiary of AirTran and represents a premium of 83 percent over the 30- day average closing price of Midwest common stock prior to AirTran's initial proposal, according to an Air Tran press release.

AirTran's first offer for all of Midwest's common stock was made on October 20, 2006 for $11.25 per share. The newest offer represents an approximately 65 percent premium over the closing price of Midwest stock on December 12, 2006. The expiration date has been extended to May 16, 2007.

As ANN reported last month, AirTran says a merger would create a new national low-cost carrier -- and result in 1,100 new jobs in Wisconsin, home to Midwest's Oak Creek headquarters. The Orlando, FL-based airline also says a merger would add nearly $1 billion to the state economy, once the airline expands available routes from Milwaukee's General Mitchell International Airport.

The influx of new jobs would boost local payroll by some $30 million, AirTran notes.

Those who have been following the merger saga will remember AirTran offered $290 million for Midwest Airlines in October -- right at the time US Airways Group was also making a hard run at Delta Air Lines. Midwest executives swiftly rejected that bid... as they did a second offer in January.

Just as USAG did with Delta, AirTran has now taken its case to what it hopes will be a more receptive audience: Midwest shareholders. So far, however, those investors appear to be heeding Midwest's request to stick with the airline -- just as Delta's creditors stuck with that carrier, which in the end doomed USAG's bid.

Midwest Air Group CEO Tim Hoeksema told The Associated Press an AirTran merger would strip Midwest of its character -- by cramming more seats onto its planes, and taking away the carrier's trademark chocolate-chip cookies.

"I think their vision, based on what you read, is to convert it to a commodity carrier that does not have the focus on service that we do and to make it into a high density, low-cost product, eliminate some of the things that we offer ... and turn it into AirTran," Hoeksema said.

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