hazelrah

Thanks for posting your source. I went back to the article and reread it and the quote was "about 50%" and for NW "about 19%"

Regardless, NW/YX "arrangement" should be looked at for unacceptable concentration of marketshare in a combined YX/NW. Also the source of funding for the other equity investors should be looked at as well. Any other airlines investing in this deal? While the Air Tran deal may be history, the fat lady may not have yet sung on the private investor deal.

flyYX

If AirTran bought Midwest and put their plan into action, AirTran would command a 60% Market share at MKE. Blue is right, the Milwaukee Journal has bounced different figures around about how much market share Midwest has at MKE. I believe it is more than 50%. Same goes for NWA... The Journal has also quoted as high as 23% market share at MKE for NWA. As for AA and UA lowering fares in response to AirTran's market bleed. Yes, it would be good. But they don't serve MKE in a significant way and I won't drive to Chicago ever to get a cheaper flight, because the time wasted driving there and paying for parking far out weighs the slightly more expensive connecting flight from MKE on a different airline other than Midwest.

hazelrah

O.K. Let's use your figures. Say that YX has a 56% marketshare at MKE as Blue reported. Let's say that NW has as high as a 23% marketshare as reported by the Wall Street Journal. So combined NW and YX have a 79% marketshare! I find this market concentration to be shocking - a lot of pricing power there. This situation is much worse than an LCC having a 60% share.

Tim34

Why drive to Chicago. The mega bus is $5.00 one way.

The thing that you need to realize is that an Airtran merger would have caused other airlines in the region to boost their MKE service. NW would have had to either increase service or risks it’s market share of MKE decline. This merger puts the number 1 and 2 airline under the same corporate banner. It does nothing to increase competition in MKE. Our fairs will continue to be high and our frequencies will continue to be low.

flyYX

But there is no merger happening between Midwest and Northwest. Northwest has indicated they will have no control over Midwest's day to day operation. TPG will control Midwest's operation and may even reorganize the company with new management. It is wait and see right now. I believe your point is moot. I think TPG will not hold onto Midwest more than 5 years if the merger is approved by the DoJ.

Tim34

Hi all,

(that should say northworst not norhworst)

I am very shocked to say that while looking through the JSonline forum, a lot of people are against the Norhwest/ private firm deal. I would have guessed that public opinion would be in the other way.

this is a small sample of what people are saying

While I like the fact that Midwest will stay Midwest I am concerned that with Northwest being part of the deal that they are keeping Milwaukee a second tier airport. With Airtran we might have seen more traffic from travelers from the east coast going west having to make a stop in MKE which would have been good business for local businesses. With the current deal we are not going to see that extra traffic which might hurt us in the long run. Having an airline like airtran with its current east coast presence might have also made MKE a more attractive spot for companies looking for a Headquarters. We will see if this is good for us or not but I have a feeling that it is not.

- Jason, Milwaukee, WI

***

This is bad news for Milwaukee. Northwest will not allow Midwest to grow as AirTran would have done. This is all about management saving their jobs.

- Paul, Milwaukee, WI

http://www.jsonline.com/content/foru...st_private.asp

hazelrah

You're cutting that line mighty fine, don't you think; we'll have to see what DOJ says. I say quit mincing around this and we all know it's anti-competitive. If it looks like a duck and quacks like a duck...well.

I believe the point is very germaine. This deal was never about economics. It is very political and about maintaining the status quo,and serving those people with interests vested in the status quo.

Tim34

Eagan, Minn.-based Northwest Airlines (NYSE: NWA) also has confirmed its involvement in the deal, saying it is a "passive investor." Midwest spokeswoman Carol Skornicka told a Milwaukee radio station Monday that Northwest's investment in the deal will be 40 percent. Skornicka did not return several calls for comment on the report.

That is a lot. Lets hope the feds kill this deal. ^

Global_Hi_Flyer

I can guarantee you that all three parties -NW, YX, and TPG have structured this deal in a way that they think will avoid anti-trust scrutiny. And generally, if objections are raised, there is a blueprint of what's necessary to avoid issues. (Consider that Virgin found a way to address all objections).

NW and YX already have a code-share that passes muster. 19% passive investment by a bigger company in a smaller one usually passes muster. I wouldn't be surprised if the deal offers TPG some kind of priority or ROFR on NW should it need capital in the future.

My bet is that there is a much better than 50% chance that this deal gets done.

MKEbound

40% is a lot, but I can see the draw NW has in keeping the status quo, however I can't blame the board for taking this offer (or, trying too.)

$16, all cash is a MUCH better deal for any shareholder than a cash/stock offer.

I am cautiously supportive of this for the moment, because I see two strong possibilities. One, Midwest already has a large amount of unrestricted cash and with some fresh investors, there is a chance for a large purchase of aircraft and expansion.

Two, now that the NW - YX partnership seems stronger than ever, I suspect that we will here an announcement that NW will fly MKE-AMS by the end of the year.

I also see AirTran trying to grow in MKE without YX, and I welcome more airlines. I'm sure other airlines were putting any MKE plans on hold while the whole AirTran vs. Midwest played out. I'm also willing to be that we hear a least one completely new carrier announce service to MKE by the end of the year.

mcblowfish

TPG comes in and looks to boost net income by reducing capacity- fares go up.
FL tries to take advantage of the situation by boosting presence in MKE.
SWA arrives and spoils the party for all...

hazelrah

Not a totally unlikey scenario. WN has done quite well in PHL and PHL is close to another heavy WN operation, namely BWI.

I could conceive of WN service to GRB as well. That would be a kick in the teeth to NW. WN would own northern Wisconsin.

Tim34

MKEbound if your predictions come through and MKE gets transatlantic service and Airtran builds a hub in MKE I will be very happy. That is the best case scenario. I would love to have a Boston like airport in MKE (I am not comparing size). No one airline dominates that airport. Customers have choices. However, I just do not see that happening. I do not think that Airtran wants to take on Northmidwest airlines. I could be wrong though and I hope that I am. We will have to wait and see what happens.

flyYX

Carol has since backed away from her statement of 40% for NWA's investment. She said she misspoke.

flyYX

With Richard Horowitz flapping his gums daily about Midwest's fudiciary duty, it seems odd to me that none of the institutional investors have released any comments regarding this possible merger with TPG. I see the three largest investors are Ocatavian, Pequot and Lightspeed.