Carrier Issues One More Last Chance

In yet another attempt to take over Midwest Air Group, AirTran Airways said Monday it had extended the deadline for Midwest shareholders to accept its $15-per-share offer from June 8 to August 10.

As of Friday, AirTran claims Midwest shareholders agreed to tender more than 59 percent of outstanding shares, according to Business Travel News.

"We are gratified by the response we are receiving from Midwest's shareholders regarding both the tender offer and the slate of directors that we have nominated for the Midwest Board," said AirTran chairman and CEO Joe Leonard. "Based on the support we have heard from Midwest shareholders and other observers, they want a new set of eyes and a fresh, independent voice inside the Midwest boardroom so that the AirTran offer can get a full and fair hearing."

Midwest has been fending off takeover threats from AirTran for quite some time, starting with the Atlanta-based carrier's initial offer of $78 million in 2005. That offer has grown considerably, to the current bid of $389 million.

AirTran added to the pressure with last week's announcement of the recommendations of two shareholder advisory firms, in an effort to garner support for its hostile takeover attempt. As reported by Aero-News, the firms made a recommendation that Midwest shareholders replace a few members of their board of directors with a slate nominated by AirTran... just days before Midwest is to hold its shareholder meeting on June 14 in Milwaukee.

"Regardless of the results, the company's board of directors continues to believe there is greater value for shareholders in the company's long-term strategic plan than in the offer proposed by AirTran," Midwest's management said Monday, according to The Associated Press -- remarks Leonard quickly dismissed.

"We are dismayed that the Midwest board continues to ignore shareholders' calls for the company to explore the merits of the AirTran offer and in their recent communication regarding the election of directors made it clear that the incumbent board is "convinced" that their standalone plan is the only route they will pursue and that shareholders should use their proxy vote to show their support for the board and the standalone plan," Leonard said.

"That is why we urge the Midwest shareholders to vote for the election of John Albertine, Jeffrey Erickson and Charles Kalmbach at the Midwest Annual Shareholders Meeting," Leonard added. "Doing so will send a strong message to Midwest's current Board and management that the owners of the company are not satisfied with Midwest's stand-alone plan, which has no clear path to implementation, no near-term reward and questionable financial projections. It is past time for changing the dynamics inside the Midwest boardroom."

Midwest chairman and CEO Timothy Hoeksema says the carrier's MD-80 purchases, new and expanded codeshares and its developing 50-seat regional program point to coming revenue increases. The company expects these initiatives to be the building blocks for strong earnings and a profitable future.

"Despite the fact that the industry is currently experiencing increasing pressure on yields, which we are addressing through pricing and yield management, we believe Midwest is well positioned to continue to grow and thrive," Hoeksema observed. "Smart companies and the ones that survive are those that offer a differentiated product that translates into market preference, and those that have developed diversified and sustainable revenue sources -- which these initiatives are projected to provide."

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