I’ve been pretty confused since word came out that TPG and Northwest would be teaming up to offer to buy Midwest. I mean, all the talk had been about AirTran’s offer for the last few months, and now that’s gone. AirTran walked away as this higher bid came rolling in. So what does TPG see in Midwest? So many questions, so little time. I’ll let this handy dandy graphic explain what I know.

As you can tell, not much is clear except that Northwest has their grubby little hands all over this. They still have this whole “we own the heartland” belief, and in their minds, Milwaukee falls into that territory. Midwest has never been much of a threat to them, but AirTran? No way, that’s a tough competitor. Can’t have that.

So they get together with TPG to buy out Midwest and remove AirTran from the equation. Northwest says they’ll be a silent partner, so there won’t be a merger or any sort of management transfer, but it means they don’t have to compete with AirTran and they like that a lot. And let’s not forget that Northwest has a nice cozy codesharing and frequent flier agreement with Midwest that gives them that warm and fuzzy cooperative feeling.

Of course, for something like this to work, they couldn’t do it alone, so they partnered with private equity firm TPG, famous for their previous airline investments. Now, TPG has a bunch of smart guys, but I cannot figure out why they’d want Midwest. This is a struggling airline with limited growth prospects in its current form, so why would they bid so much money for the airline? If they thought they could make some good money, they’d do it, of course. But how can they make money here? I’m sure they have a plan, but I don’t know how it can make this investment pay for itself.

One person who is happy is the CEO of Midwest. He would have lost his job with AirTran but now he gets to keep it. It would make sense if they kept him and guaranteed him a job in exchange for his endorsement of the deal. It was his opposition among others that held up the AirTran deal for so long. Maybe this is the way to get things moving, if he’s willing to play along.

But what will happen to the rest of the employees? I’d be nervous if I were them. Job cuts wouldn’t surprise me at all as TPG tries to get money out of their investment.

Now, AirTran is done here . . . or are they? Even if this deal goes through, there’s no reason they can’t set up shop in Milwaukee on their own. They’ll just have some added competition now, but they could still do it if they wanted. My guess is that instead they’ll look for another airline that might want to merge. (Frontier, anyone?)

There’s lots of speculation here, but I honestly just don’t get it. I know why Northwest likes this. I know why Midwest’s CEO likes this. I just don’t know what TPG sees.