Sends Second Letter To Midwest Shareholders Urging Review Of Offer

Midwest Airlines' cold response to AirTran's merger offers hasn't deterred AirTran chairman and CEO Joe Leonard -- he's more determined than ever to make the deal a reality. The resolute AirTran executive has taken out full-page advertisements in regional newspapers, courted local officials and appealed directly to passengers and shareholders.

As ANN reported, AirTran recently upped its original merger offer from $290 million to $345 million, and Leonard tendered that offer directly to Midwest shareholders after his original offer its board met with a flat refusal.

Under AirTran's latest offer, Midwest shareholders will receive $13.25 -- consisting of $6.625 in cash and 0.5884 of a share of AirTran common stock -- for each share of Midwest.

Late last week, Leonard sent another letter to Midwest shareholders urging them to carefully review AirTran's offer. In this latest letter, Leonard explained why he made his offer directly to them. He said Midwest's management refused to explore the merger offer leaving him no choice but to appeal directly to shareholders.

As part of his pitch, Leonard says, "The combined carrier will be better able to succeed in an increasingly competitive environment; it would expand service in Milwaukee and Kansas City; and provide more low fares to more cities. We also expect the combined company to create more jobs and increase advancement opportunities for employees of both airlines, and increase the economic benefit of travel and tourism to the cities in which AirTran and Midwest currently operate."

He warned Midwest's shareholders their smaller airline -- with about 3,500 employees -- has what he described as "an increasingly burdensome cost structure" because it operates older, less fuel-efficient aircraft. He says this will make competition from larger airlines inevitable -- especially freshly restructured airlines emerging from bankruptcy.

Leonard also said Midwest doesn't have a particularly stellar earnings record saying, "...if you look at Midwest's record over the past five years, it is clear that existing management has been unable to achieve anything approaching consistent profitability. Is the possibility of more of the same really what you as a shareholder are comfortable with for the future?"

Midwest's recently announced expansion plan calls for a 15 percent capacity increase this year including six new destinations. It's just entered an agreement with SkyWest to operate several Canadair Regional Jets. Last year, Midwest posted a profit for the first time since 2003.

Leonard closed by urging Midwest's shareholders to talk to their board. "This is your opportunity to speak directly to your Board. Tender your shares pursuant to AirTran's offer, and let your Board know that you want them to sit down and negotiate a merger agreement with AirTran."

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