As I indicated in a recent piece in Bloggingstocks.com, I thought there was a good chance that the bid for Midwest Air Group Inc. (AMEX:MEH) would get a bump. This is fairly typical for hostile deals.
Well, that's what happened today when AirTran Holding Inc. (NYSE: AAI) said it will increase its offer by 19% to $345 million. This is according to a letter from the Chairman and CEO of AirTran, Joe Leonard.
While Midwest has been resistant, it will be hard to keep this up. After all, the current offer is very enticing for shareholders. And AirTran has now made its offer directly to shareholders.
Besides, as the airline industry consolidates, a small player like Midwest can easily get shut out. In other words, it's probably inevitable that the company will cave-in to AirTran.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.











Reader Comments (Page 1 of 1)
1-12-2007 @ 1:55PM
Ryan Spellman said...
I forsee this happening no matter what. Midwest has had some issues recently since they bought the new fleet of 717's and maybe this is their best bet. I Think that AirTran is on the right path with this and Joe knows his stuff. My opinion is that AirTran wants to expand on hubs. They have a glareling weakness right now with their system in that their hub at ATL and their mini hub at MCO leave the network very restricted in capacity and ability to reach west. the 717's from the Midwest fleet would be very useful based in MCI as a hub city. They could than fly much more western cities with the 717 in markets that they could not reach from ATL, MCO or MDW. Essentially what I see happening is they will buy Midwest, gut about 30% of the network re base the 717's, retire the MD-80 fleet, sell off express and expand out west. the 717 is the bread and butter of the success experinced by them and they want more. More are not available because of the shut down of production though. they bought the former TWA fleet, they took some of Hawiians and JetStar of Australia is not going to give any up which means they have to look elsewhere. The 737 is just too big for some markets and it is a bit more expensive to fly than the 717 so for them to grab this fleet and pick up MKE and MCI will solidify them in many markets that the potential has been there for yet the ability to serve has been lacking.
1-19-2007 @ 12:36AM
Sean Hackbarth said...
What many outside Milwaukee don't see is the sentimental feeling the city has with Midwest. It's an airline that gone down its own path with wider, leather seats, fresh-baked chocolate chip cookies, and its award-winning service. That won't and can't be noticed by most shareholders. That's the name of the game in capitalism. Being bought by AirTran may be the best of all the not-so-good options, but it won't make a lot of Milwaukee travelers happy.