A conversation with a fellow blogger over at Airline Views made me realize that I hadn’t really checked in on AirTran’s hostile takeover bid for Midwest lately. The catfight is in full swing, and it continues to be an interesting news story, so here’s the latest.
AirTran continues to want to buy Midwest and Midwest continues to tell them to go away. Pretty simple, right? Of course not. AirTran’s strategy of late seems to be convincing the people of Milwaukee that this would be good for them. Their filing with the SEC talks about how great they’re going to be for the community. In short, this equation says it all:
More flights + More jobs + Lower fares = Happy Wisconsinites with more money for Miller Lite and cheese curds.
The airline is now saying that they will increase flights by 50% with a mix of more flights to cities already served and new flights to new cities. This map shows their planned route map out of Milwaukee by 2009. Red lines are new routes.
Some of these may very well make sense but others seem unlikely, especially when you look at the planned number of daily flights as shown in the presentation.
How about the 3 daily flights to Bloomington/Normal (Illinois)? Maybe the 5 daily to Detroit? I’m sure Northwest won’t care about that at all. Some of these really don’t pass the sniff test. Right now, Midwest flies from Milwaukee to LAX once a day. AirTran says they’ll be up to 4 daily by 2009 in this plan. Why is that unlikely? Well, they only serve their monster hub in much larger Atlanta three times a day from LAX. I would be surprised if Milwaukee could support more.
That being said, this could actually happen . . . the question is how long would it be before they pull the plug? Everyone knows AirTran isn’t shy in walking away from routes that don’t pan out quickly. The idea that they’d give it a shot at success by 2009 is certainly something that should appeal to those in Milwaukee, but it’s hard to say what the network will look like by 2010.
While this is all going on, what is Midwest saying?
Midwest has put out a press release poking holes in AirTran’s offer saying that they have “been confronted by many false and misleading claims made by AirTran about its offer and Midwest’s business — comments we believe are designed to divert attention from AirTran’s deteriorating performance, lack of planning, and absence of a credible and profitable growth plan for its future. It is time to set the record straight.”
Ouch, that stings.
The airline goes on to detail everything that is wrong with AirTran in a very direct and personal manner. They back up everything with facts except for the part that the AirTran offer will result in less value for shareholders than going it alone. That really can’t be proven – it’s a calculated risk. Midwest is hoping that all these facts will convince their investors to stick with the plan. If they decide not to, AirTran could win this fight.