NWA acquires Midwest?????????
NWA acquires Midwest?????????
08-13-2007, 06:14 PM
#4
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Joined APC: Dec 2006
Position: I was acquired, Not Hired
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SAAB,
There's a good summary about 10 threads below this one entitled Airtran + Midwest = True ? It explains Air Tran's attempt to takeover Midwest and then Midwest's agreement to hear them out. It goes on to say that a finance group named TPG made a better offer for Midwest Express that will allow them to stay as a stand alone entity. It also suggests that TPG has ties to Northwest, but is not NWAC per se. The Wizard of Oz scenario, don't look at the man behind the curtain, just look at the screen.
I believe this provides a synopsis, but please refer to the aforementioned thread for accuracy.
In my opinion, this was a strategic move by TPG/NWAC to prevent further poaching of their prized North Central route structure and their operation in Milwaukee. Also an opinion, the folks at NWA are realizing a reduction in revenue per avail seat mile (RASM) at MSP with Air Tran's entry into a handful of markets there. I believe this strong reaction was in part due to what happened at Detroit (DTW) with the addition of Southwest, a handful of charter airlines and recently Air Tran.
Basically, NWA saw what happened at DTW with the addition of Low-cost carriers and drew a line in the sand with regards to Air tran operating in the backyard of MSP and the focus city of MKE.
Will this cause further mergers ???
No one knows, but I'll throw out an opinion to give this thread room for discussion.
What's Air tran's next move ?? My guess is that Forklift Joe might look into the world of codesharing or acquisition with/of a regional carrier again. Citrus has Boeing working overtime on deliveries of the 737s, and it's my guess that the 717 market is dry as a bone. So Air Tran is getting airframes as quick as they can be delivered, but is it fast enough or will Air Tran look at another airline for more uplift. IMHO, they will look at a codeshare or acquisition.
Where or who ? I speculate that Joe Leonard will look at a mid-America hub in the neighborhoods of maybe STL, MCI, OKC or IND and buddy up with Ornstein, Hulas or Shuttle America ? This is my guess, and just that: a guess.
Everyone else ? I for one was surprised at AWA/USAir's attempt to takeover Delta. I think it's failure has everyone backing away from the merger mania. In addition, airlines are in a precarious position. They are finally posting somewhat consistent profits which have prompted labor to querry management about long overdue wage snapbacks. In addition, the US economy is in my opinion slowing back down with the indicators of a slowing housing market, stock market volatility, interest rate uncertainty, and skyhigh energy costs. Generally, these factors makes it hard for an airline board of directors to allocate millions or billions for mergers and acquisitions.
Just my two cents...I'd be curious of other opinions.
FF
There's a good summary about 10 threads below this one entitled Airtran + Midwest = True ? It explains Air Tran's attempt to takeover Midwest and then Midwest's agreement to hear them out. It goes on to say that a finance group named TPG made a better offer for Midwest Express that will allow them to stay as a stand alone entity. It also suggests that TPG has ties to Northwest, but is not NWAC per se. The Wizard of Oz scenario, don't look at the man behind the curtain, just look at the screen.
I believe this provides a synopsis, but please refer to the aforementioned thread for accuracy.
In my opinion, this was a strategic move by TPG/NWAC to prevent further poaching of their prized North Central route structure and their operation in Milwaukee. Also an opinion, the folks at NWA are realizing a reduction in revenue per avail seat mile (RASM) at MSP with Air Tran's entry into a handful of markets there. I believe this strong reaction was in part due to what happened at Detroit (DTW) with the addition of Southwest, a handful of charter airlines and recently Air Tran.
Basically, NWA saw what happened at DTW with the addition of Low-cost carriers and drew a line in the sand with regards to Air tran operating in the backyard of MSP and the focus city of MKE.
Will this cause further mergers ???
No one knows, but I'll throw out an opinion to give this thread room for discussion.
What's Air tran's next move ?? My guess is that Forklift Joe might look into the world of codesharing or acquisition with/of a regional carrier again. Citrus has Boeing working overtime on deliveries of the 737s, and it's my guess that the 717 market is dry as a bone. So Air Tran is getting airframes as quick as they can be delivered, but is it fast enough or will Air Tran look at another airline for more uplift. IMHO, they will look at a codeshare or acquisition.
Where or who ? I speculate that Joe Leonard will look at a mid-America hub in the neighborhoods of maybe STL, MCI, OKC or IND and buddy up with Ornstein, Hulas or Shuttle America ? This is my guess, and just that: a guess.
Everyone else ? I for one was surprised at AWA/USAir's attempt to takeover Delta. I think it's failure has everyone backing away from the merger mania. In addition, airlines are in a precarious position. They are finally posting somewhat consistent profits which have prompted labor to querry management about long overdue wage snapbacks. In addition, the US economy is in my opinion slowing back down with the indicators of a slowing housing market, stock market volatility, interest rate uncertainty, and skyhigh energy costs. Generally, these factors makes it hard for an airline board of directors to allocate millions or billions for mergers and acquisitions.
Just my two cents...I'd be curious of other opinions.
FF
08-14-2007, 06:50 AM
#6
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Joined APC: May 2007
Position: 767 Captain
Posts: 335
From ATW Daily News. This sums it up for those of you wondering
Midwest board set to strike deal with TPG Capital, Northwest Airlines
Tuesday August 14, 2007
Midwest Air Group closed the door on an acquisition by eager AirTran Holdings, opting instead to pursue an unexpected all-cash deal offered by private equity investment firm TPG Capital, which is partnering with Midwest neighbor Northwest Airlines.
TPG Capital, which has been involved in recent bids for Qantas, Alitalia and Iberia, could finalize a "definitive" merger agreement with Midwest as early as Aug. 15, both TPG and Midwest said.
On July 31, Midwest announced it would open talks with AirTran but also said it would hold discussions with other groups that had expressed an interest in the company (ATWOnline, Aug. 1). AirTran had offered $15.75 per Midwest share, with a total equity value of cash and stock in excess of $431 million, the Atlanta-based carrier said.
On Sunday, Midwest board members unanimously approved the pursuit of TPG's offer of $16 cash per share. NWA released a statement saying that it would provide some financing but would not participate in management or control of Midwest. "The previously announced codeshare agreement between NWA and Midwest Airlines will remain in place and the two airlines will explore cost reduction activities such as joint fuel purchasing," it said.
"Our acquisition would provide for greater stability and prospects for all of the company's important constituencies," TPG Capital Partner Richard Schifter wrote in the proposal letter to Midwest. "We believe that our experience in this sector, together with our track record for maintaining stable, long-term investments, argue strongly in favor of an acquisition by TPG."
In announcing its decision to drop its bid, AirTran rebuked Midwest's decision, noting that the board was ignoring the "overwhelming majority" of shareholders' wishes. "Instead, the Midwest board has chosen a path that will benefit current senior management by selling to a private equity firm and a so-called 'passive investor' [NWA] whose involvement will surely raise antitrust concerns, causing doubt for shareholders on whether a transaction can, in fact, close," AirTran CEO Joe Leonard said.
by Sandra Arnoult
Tuesday August 14, 2007
Midwest Air Group closed the door on an acquisition by eager AirTran Holdings, opting instead to pursue an unexpected all-cash deal offered by private equity investment firm TPG Capital, which is partnering with Midwest neighbor Northwest Airlines.
TPG Capital, which has been involved in recent bids for Qantas, Alitalia and Iberia, could finalize a "definitive" merger agreement with Midwest as early as Aug. 15, both TPG and Midwest said.
On July 31, Midwest announced it would open talks with AirTran but also said it would hold discussions with other groups that had expressed an interest in the company (ATWOnline, Aug. 1). AirTran had offered $15.75 per Midwest share, with a total equity value of cash and stock in excess of $431 million, the Atlanta-based carrier said.
On Sunday, Midwest board members unanimously approved the pursuit of TPG's offer of $16 cash per share. NWA released a statement saying that it would provide some financing but would not participate in management or control of Midwest. "The previously announced codeshare agreement between NWA and Midwest Airlines will remain in place and the two airlines will explore cost reduction activities such as joint fuel purchasing," it said.
"Our acquisition would provide for greater stability and prospects for all of the company's important constituencies," TPG Capital Partner Richard Schifter wrote in the proposal letter to Midwest. "We believe that our experience in this sector, together with our track record for maintaining stable, long-term investments, argue strongly in favor of an acquisition by TPG."
In announcing its decision to drop its bid, AirTran rebuked Midwest's decision, noting that the board was ignoring the "overwhelming majority" of shareholders' wishes. "Instead, the Midwest board has chosen a path that will benefit current senior management by selling to a private equity firm and a so-called 'passive investor' [NWA] whose involvement will surely raise antitrust concerns, causing doubt for shareholders on whether a transaction can, in fact, close," AirTran CEO Joe Leonard said.
by Sandra Arnoult
08-14-2007, 09:13 PM
#7
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Airtran's offer raised to $16.25... kind of nice to see somebody other than the pilot group get whipsawed. Seriously though, Midwest is so amazingly mismanaged that if Northwest just wanted to keep them out of the way the best thing they could do is buy them and let them wander about on their own.
08-15-2007, 02:57 AM
#8
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Posts: 335
Originally Posted by Radar
Airtran's offer raised to $16.25... kind of nice to see somebody other than the pilot group get whipsawed. Seriously though, Midwest is so amazingly mismanaged that if Northwest just wanted to keep them out of the way the best thing they could do is buy them and let them wander about on their own.
AirTran ups the ante in Midwest bidding war
Wednesday August 15, 2007
AirTran Holdings raised its bid for Midwest Air Group late yesterday, offering $16.25 per share in cash and stock, exceeding the $16 per share cash offer from TPG Capital and Northwest Airlines that was endorsed unanimously by the Midwest board Sunday (ATWOnline, Aug. 14).
AirTran estimated the total value of its new offer at $445 million. "Midwest's shareholders are concerned that the acquisition of Midwest by a private equity firm, along with Northwest Airlines, will block competition, raise fares, reduce employment levels and reduce service," AirTran Chairman and CEO Joe Leonard said. He reiterated that antitrust issues could prevent a TPG/Midwest deal from closing. The new offer comprises $10 cash per share and 0.6056 share of AirTran common stock.
Pequot Capital Management, an investment firm that holds an estimated 8.8% of Midwest, urged the company to reconsider its decision to support TPG's bid, saying it still believed that AirTran would be the better choice, according to press reports. Midwest did not release a statement yesterday.
Analysts at Raymond James & Assoc. said Northwest's involvement was designed to keep a low-cost competitor out of its Midwestern US stronghold. "Northwest, in our view, would dismantle Midwest over time and integrate its operations into Northwest," the report said.
by Sandra Arnoult
08-15-2007, 06:57 AM
#9
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Here's an interesting tidbit I just learned. TPG is the parent company of Indigo, the parent company of Spirit Airlines. Odd that NWA would partner with the parent company if their biggest rival in DTW. Even more odd that this happens a week after Spirit announces the closure of its DTW base and the desire to refocus its strength in the Latin market. Preemptive move to satisfy antitrust concerns?
Things that make you go hmmmm.
Things that make you go hmmmm.
08-15-2007, 07:00 AM
#10
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Joined APC: Apr 2007
Posts: 867
Originally Posted by John Pennekamp
Here's an interesting tidbit I just learned. TPG is the parent company of Indigo, the parent company of Spirit Airlines. Odd that NWA would partner with the parent company if their biggest rival in DTW. Even more odd that this happens a week after Spirit announces the closure of its DTW base and the desire to refocus its strength in the Latin market. Preemptive move to satisfy antitrust concerns?
Things that make you go hmmmm.
Things that make you go hmmmm.
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