Midwest Air complies with antitrust request
#1
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Midwest Air complies with antitrust request
Looks like Midwest is getting the green light from the DOJ to move ahead with TPG/NWA deal. Although it can't happen before Jan. 31, 2008.
http://biz.yahoo.com/prnews/071207/aqf016.html?.v=32
http://biz.yahoo.com/prnews/071207/aqf016.html?.v=32
Last edited by flyYX; Dec 7, 2007 at 8:24 am
#2
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Looks like Midwest is getting the green light from the DOJ to move ahead with TPG/NWA deal. Although it can't happen before Jan. 31, 2008.
http://biz.yahoo.com/prnews/071207/aqf016.html?.v=32
http://biz.yahoo.com/prnews/071207/aqf016.html?.v=32
Now, the next question I have is when will Midwest announce what aircraft will replace the MD80s??? They've been "deep into the analysis" on potential replacements for nearly two years now. I believe a decision was planned by year-end (although the same thing was implied back in 2006 by management as well).
Last edited by BlueHorseShoe2000; Dec 7, 2007 at 9:02 am
#3
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Looks like Midwest is getting the green light from the DOJ to move ahead with TPG/NWA deal. Although it can't happen before Jan. 31, 2008.
http://biz.yahoo.com/prnews/071207/aqf016.html?.v=32
http://biz.yahoo.com/prnews/071207/aqf016.html?.v=32
Here's an internal Midwest memo:
To: All Midwest and Skyway Airlines Employees
Date: December 7, 2007
From: Timothy E. Hoeksema
Subject: TPG Transaction Update
I am pleased to be able to give you updated information on the TPG transaction. As you know, the transaction is currently being reviewed by the U.S. Justice Department, which routinely examines mergers from an antitrust perspective: They attempt to determine if there will be an anti-competitive effect resulting from the merger. In order to conduct their review, they have asked for voluminous information from us and from TPG, as well as from Northwest Airlines even though they will have only a minority passive investment in the entity that is being created to own Midwest Airlines.
All the parties have responded to the DOJ's requests for information and have formally certified to the DOJ that they have "substantially complied" with their request. In addition, we have entered into a "timing agreement" with DOJ in which all the parties agree to a schedule to be followed for the review. Under that agreement, the parties have agreed that we will not close the transaction before January 31, 2008 without the DOJ's consent. Timing agreements are entered into to provide some certainty around timing while at the same time permitting the DOJ to have the time they require to perform their review. We anticipate completing the transaction as soon as practicable consistent with the timing agreement.
As you know, the transaction was approved by shareholders at a special meeting on October 30. The transaction is subject to the satisfaction of customary closing conditions.
Statements about the expected timing, completion and effects of the proposed merger and all other statements in this release, other than historical facts, constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements and any such forward-looking statements are qualified in their entirety by reference to the following cautionary statements. All forward-looking statements speak only as of the date hereof and are based on current expectations and involve a number of assumptions, risks and uncertainties that could cause the actual results to differ materially from such forward-looking statements. Midwest may not be able to complete the proposed merger on the terms described above or other acceptable terms or at all because of a number of factors, including the failure to satisfy the closing conditions. These factors, and other factors that may affect the business or financial results of Midwest, are described in the risk factors included in "Item 1A. Risk Factors" in Midwest's "Annual Report on Form 10-K" for the year ended December 31, 2006.
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Compliance is not for Midwest Airlines to determine. DOJ determines whether the information TPG, Northwest and Midwest have submitted is in compliance.
Last edited by hazelrah; Dec 8, 2007 at 1:38 pm
#7
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I read the press on this a little differently. It looks to me that DOJ had some additional requests for information. It could be nothing of signifcance, or it could indicate that DOJ finds the deal problematic under antitrust law. If I had to bet, I'd say that DOJ will approve this, but I wouldn't be too confident of that just yet.
See http://www.jsonline.com/story/index.aspx?id=694494
Midwest Air Group sale delayed
Antitrust regulators still reviewing TPG, Northwest deal
See http://www.jsonline.com/story/index.aspx?id=694494
Midwest Air Group sale delayed
Antitrust regulators still reviewing TPG, Northwest deal
#8
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Analyst puts merger odds at 75%
See http://www.jsonline.com/story/index.aspx?id=696965
I continue to think that the DOJ is likely to have serious concerns about a deal that largely amounts to NWA's payment to keep AirTran out of NWA's core market.
See http://www.jsonline.com/story/index.aspx?id=696965
I continue to think that the DOJ is likely to have serious concerns about a deal that largely amounts to NWA's payment to keep AirTran out of NWA's core market.
#9
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Analyst puts merger odds at 75%
See http://www.jsonline.com/story/index.aspx?id=696965
I continue to think that the DOJ is likely to have serious concerns about a deal that largely amounts to NWA's payment to keep AirTran out of NWA's core market.
See http://www.jsonline.com/story/index.aspx?id=696965
I continue to think that the DOJ is likely to have serious concerns about a deal that largely amounts to NWA's payment to keep AirTran out of NWA's core market.
#10
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Wall Street should be concerned about whether this deal will go through. If NWA had written a check to Midwest in exchange for an agreement not to be acquired by AirTran, that would not have passed muster. From the outside, this deal looks like a complex way to achieve the very same purpose.
I'd call this a coin flip at this point.
I'd call this a coin flip at this point.
#11
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Wall Street should be concerned about whether this deal will go through. If NWA had written a check to Midwest in exchange for an agreement not to be acquired by AirTran, that would not have passed muster. From the outside, this deal looks like a complex way to achieve the very same purpose.
I'd call this a coin flip at this point.
I'd call this a coin flip at this point.
If the deal is completed in January it will be interesting to see what TPG and Northwest will do with Midwest? As Blue points out Midwest connect is not that profitable. Will they cut back on Midwest connect flights as well as long hall flights out of MKE? SEA may mirror SFO this year. I do not understand the MKE-LAX market well enough to have an opinion on it but who knows. I also do not see MKE-SAN ever happening.
#12
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Loss of competition feared in Midwest sale: Antitrust group raises concerns about dea
Dec 19, 2007 (Milwaukee Journal Sentinel - McClatchy-Tribune Information Services via COMTEX) -- NWA | charts | news | PowerRating -- Midwest Air Group Inc.'s planned sale to a group that includes Northwest Airlines Corp. could reduce competition between the two airlines and make it harder for low-cost carriers to enter Milwaukee, a new study concludes.
The report, issued by the American Antitrust Institute, focuses on what it calls the unusual structure of Midwest Air's proposed $451.8 million sale to TPG Capital and Northwest Airlines.
TPG Capital, a private equity firm based in Fort Worth, Texas, would own a 53% stake in Midwest Air while Eagan, Minn.-based Northwest would own a 47% stake but would not participate in management or control of Midwest. Northwest would have the option to eventually buy TPG's stake.
The Northwest stake, coupled with its buyout option, is key to the analysis that Department of Justice antitrust regulators will conduct, said Diane Moss, who wrote the report for the institute, a nonprofit group that favors stronger enforcement of antitrust laws.
"We're not going so far as to say this should be blocked," said Moss, an economist and institute vice president, on Tuesday. But antitrust regulators "should look carefully" at the proposed sale, she said.
Oak Creek-based Midwest Air, which flies as Midwest Airlines and Midwest Connect, announced Dec. 7 it has substantially complied with a request from antitrust regulators for additional information on the sale. Also, it was announced the sale will not be completed before Jan. 31 unless the Justice Department grants earlier approval.
Limited information
The institute's review is based on publicly available information and doesn't include the large amounts of private documents provided to the Justice Department by Midwest Air, said Carol Skornicka, the company's senior vice president of corporate affairs.
The institute's conclusions are limited by that lack of private information, said Skornicka, who declined to comment further on the report.
The report says Northwest's 47% ownership of Midwest "could fundamentally change the intensity of rivalry between Northwest and Midwest, despite assurances by Northwest's management that the brands will continue to compete."
Maximizing profits
The Northwest stake would be substantial, Moss said, giving Northwest an incentive to maximize its profits by not competing with Midwest Airlines and Midwest Connect.
"Sales that Northwest 'steals' from Midwest through aggressive rivalry means losses for Midwest," the report says. "After the acquisition, however, lower profits for Midwest also mean reduced profits for Northwest. Thus, Northwest's substantial ownership interest in Midwest may temper any incentive for Northwest to engage in aggressive, head-to-head competition."
Also, even if Northwest is not represented on the Midwest board of directors, there are other ways for Northwest to "exercise control over Midwest decision-making," the report says. That includes the airlines' newly created code share agreement, in which Northwest and Midwest sell seats on each other's flights.
Discouraging others
Finally, the potential for Northwest to own all of Midwest could chill competition and discourage low-cost airlines from entering Milwaukee or expanding here, Moss said. Northwest is the No. 2 carrier at Mitchell International Airport, and Midwest and Northwest would have a combined Milwaukee market share of around 70%, the report says.
"None of this looks very good for competition and consumers, who could lose access to lower cost carriers and instead get higher prices, fewer choices on routes and lower service quality," said Albert Foer, institute president, in a statement.
Midwest Air executives have said they expect antitrust regulators to approve the sale.
Midwest Air's stock traded at around $14 a share Thursday and Friday, despite the company's pending sale at $17 a share. That may have been due to investor skittishness about the pending sale, which Midwest Air Chairman and Chief Executive Officer Timothy Hoeksema had initially expected to complete by Dec. 31.
Midwest Air stock has since recovered, and closed Tuesday at $15 a share, up 90 cents, or 6.4%.
The TPG/Northwest cash offer, which Midwest Air accepted Aug. 16, topped AirTran Holdings Inc.'s cash-and-stock offer of $16.27 a share, and led AirTran, of Orlando, Fla., to drop its takeover campaign.
The report, issued by the American Antitrust Institute, focuses on what it calls the unusual structure of Midwest Air's proposed $451.8 million sale to TPG Capital and Northwest Airlines.
TPG Capital, a private equity firm based in Fort Worth, Texas, would own a 53% stake in Midwest Air while Eagan, Minn.-based Northwest would own a 47% stake but would not participate in management or control of Midwest. Northwest would have the option to eventually buy TPG's stake.
The Northwest stake, coupled with its buyout option, is key to the analysis that Department of Justice antitrust regulators will conduct, said Diane Moss, who wrote the report for the institute, a nonprofit group that favors stronger enforcement of antitrust laws.
"We're not going so far as to say this should be blocked," said Moss, an economist and institute vice president, on Tuesday. But antitrust regulators "should look carefully" at the proposed sale, she said.
Oak Creek-based Midwest Air, which flies as Midwest Airlines and Midwest Connect, announced Dec. 7 it has substantially complied with a request from antitrust regulators for additional information on the sale. Also, it was announced the sale will not be completed before Jan. 31 unless the Justice Department grants earlier approval.
Limited information
The institute's review is based on publicly available information and doesn't include the large amounts of private documents provided to the Justice Department by Midwest Air, said Carol Skornicka, the company's senior vice president of corporate affairs.
The institute's conclusions are limited by that lack of private information, said Skornicka, who declined to comment further on the report.
The report says Northwest's 47% ownership of Midwest "could fundamentally change the intensity of rivalry between Northwest and Midwest, despite assurances by Northwest's management that the brands will continue to compete."
Maximizing profits
The Northwest stake would be substantial, Moss said, giving Northwest an incentive to maximize its profits by not competing with Midwest Airlines and Midwest Connect.
"Sales that Northwest 'steals' from Midwest through aggressive rivalry means losses for Midwest," the report says. "After the acquisition, however, lower profits for Midwest also mean reduced profits for Northwest. Thus, Northwest's substantial ownership interest in Midwest may temper any incentive for Northwest to engage in aggressive, head-to-head competition."
Also, even if Northwest is not represented on the Midwest board of directors, there are other ways for Northwest to "exercise control over Midwest decision-making," the report says. That includes the airlines' newly created code share agreement, in which Northwest and Midwest sell seats on each other's flights.
Discouraging others
Finally, the potential for Northwest to own all of Midwest could chill competition and discourage low-cost airlines from entering Milwaukee or expanding here, Moss said. Northwest is the No. 2 carrier at Mitchell International Airport, and Midwest and Northwest would have a combined Milwaukee market share of around 70%, the report says.
"None of this looks very good for competition and consumers, who could lose access to lower cost carriers and instead get higher prices, fewer choices on routes and lower service quality," said Albert Foer, institute president, in a statement.
Midwest Air executives have said they expect antitrust regulators to approve the sale.
Midwest Air's stock traded at around $14 a share Thursday and Friday, despite the company's pending sale at $17 a share. That may have been due to investor skittishness about the pending sale, which Midwest Air Chairman and Chief Executive Officer Timothy Hoeksema had initially expected to complete by Dec. 31.
Midwest Air stock has since recovered, and closed Tuesday at $15 a share, up 90 cents, or 6.4%.
The TPG/Northwest cash offer, which Midwest Air accepted Aug. 16, topped AirTran Holdings Inc.'s cash-and-stock offer of $16.27 a share, and led AirTran, of Orlando, Fla., to drop its takeover campaign.
#13
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JSOnline Editorial: The Northwest factor
Posted on JSOnline 12/25/2007
A new study raises that old concern about the role of Northwest Airlines in a deal to sell Milwaukee's hometown airline. But that sale is still the better option.
From the Journal Sentinel
Posted: Dec. 25, 2007
A new study finds that the proposed sale of Midwest Air Group to a private equity firm and competitor Northwest Airlines could reduce competition between the two airlines and make it difficult for low-cost carriers to begin flying out of Mitchell International Airport.
The study raises the specter of a Northwest takeover of Midwest, which is a distinct possibility. Northwest has an option to buy out TPG Capital, the firm that is taking the lead in this dance. TPG, based in Fort Worth, Texas, would own 53% of Midwest; Northwest would own the other 47%. Federal antitrust regulators are considering the $451.8 million deal.
Northwest's involvement was always a concern for travelers because of its spotty service and on-again, off-again interest in the Milwaukee market. But it's unlikely that the Department of Justice will nix the deal, and that's probably for the best. The alternative was a sale to AirTran Holdings, which would have meant the end of Midwest's unique culture and service. By selling to TPG/Northwest, Midwest preserves for now what makes the airline special.
But there are concerns. If Northwest eventually took control, it would have a huge share of the business at Mitchell, which is one motivation for the airline's interest. Another is playing defense. Northwest, with hubs in Minneapolis and Detroit, had a strategic interest in defending its Midwest dominance against AirTran.
Diana Moss, author of the report by the American Antitrust Institute, a nonprofit group that favors stronger enforcement of antitrust laws, told the Journal Sentinel's Tom Daykin that regulators will focus on the Northwest stake in this deal and that buyout option (www.jsonline.com/698246).
But it's not clear that a Northwest and Midwest combination, if it comes, would restrain competition at Mitchell. There is still plenty of room for growth at the airport. Since the deal was announced, AirTran has said it would expand service and the new discount carrier, Skybus, has begun flying.
We share the concerns of many travelers over Northwest's record and hope the airline has gotten the message that it has to clean up its act. The Department of Justice must ensure that travelers won't be pinched down the road by a deal that opens the door to less competition at Mitchell. If the deparment believes that will happen, it should insist on changes. Wisconsin travelers should be a priority.
But remember, Midwest had two choices once AirTran began pursuing it: capitulate or find another buyer. This deal gives Midwest a chance, at least, to preserve its culture and legacy of service for a while longer.
Should the Department of Justice approve the sale of Midwest Air Group to TPG Capital? Why or why not? Send a letter to: Journal Sentinel editorial department. To read the report, go to www.antitrustinstitute.org
A new study raises that old concern about the role of Northwest Airlines in a deal to sell Milwaukee's hometown airline. But that sale is still the better option.
From the Journal Sentinel
Posted: Dec. 25, 2007
A new study finds that the proposed sale of Midwest Air Group to a private equity firm and competitor Northwest Airlines could reduce competition between the two airlines and make it difficult for low-cost carriers to begin flying out of Mitchell International Airport.
The study raises the specter of a Northwest takeover of Midwest, which is a distinct possibility. Northwest has an option to buy out TPG Capital, the firm that is taking the lead in this dance. TPG, based in Fort Worth, Texas, would own 53% of Midwest; Northwest would own the other 47%. Federal antitrust regulators are considering the $451.8 million deal.
Northwest's involvement was always a concern for travelers because of its spotty service and on-again, off-again interest in the Milwaukee market. But it's unlikely that the Department of Justice will nix the deal, and that's probably for the best. The alternative was a sale to AirTran Holdings, which would have meant the end of Midwest's unique culture and service. By selling to TPG/Northwest, Midwest preserves for now what makes the airline special.
But there are concerns. If Northwest eventually took control, it would have a huge share of the business at Mitchell, which is one motivation for the airline's interest. Another is playing defense. Northwest, with hubs in Minneapolis and Detroit, had a strategic interest in defending its Midwest dominance against AirTran.
Diana Moss, author of the report by the American Antitrust Institute, a nonprofit group that favors stronger enforcement of antitrust laws, told the Journal Sentinel's Tom Daykin that regulators will focus on the Northwest stake in this deal and that buyout option (www.jsonline.com/698246).
But it's not clear that a Northwest and Midwest combination, if it comes, would restrain competition at Mitchell. There is still plenty of room for growth at the airport. Since the deal was announced, AirTran has said it would expand service and the new discount carrier, Skybus, has begun flying.
We share the concerns of many travelers over Northwest's record and hope the airline has gotten the message that it has to clean up its act. The Department of Justice must ensure that travelers won't be pinched down the road by a deal that opens the door to less competition at Mitchell. If the deparment believes that will happen, it should insist on changes. Wisconsin travelers should be a priority.
But remember, Midwest had two choices once AirTran began pursuing it: capitulate or find another buyer. This deal gives Midwest a chance, at least, to preserve its culture and legacy of service for a while longer.
Should the Department of Justice approve the sale of Midwest Air Group to TPG Capital? Why or why not? Send a letter to: Journal Sentinel editorial department. To read the report, go to www.antitrustinstitute.org
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Posted on JSOnline 12/25/2007
A new study raises that old concern about the role of Northwest Airlines in a deal to sell Milwaukee's hometown airline. But that sale is still the better option.
From the Journal Sentinel
Posted: Dec. 25, 2007
A new study finds that the proposed sale of Midwest Air Group to a private equity firm and competitor Northwest Airlines could reduce competition between the two airlines and make it difficult for low-cost carriers to begin flying out of Mitchell International Airport.
The study raises the specter of a Northwest takeover of Midwest, which is a distinct possibility. Northwest has an option to buy out TPG Capital, the firm that is taking the lead in this dance. TPG, based in Fort Worth, Texas, would own 53% of Midwest; Northwest would own the other 47%. Federal antitrust regulators are considering the $451.8 million deal.
Northwest's involvement was always a concern for travelers because of its spotty service and on-again, off-again interest in the Milwaukee market. But it's unlikely that the Department of Justice will nix the deal, and that's probably for the best. The alternative was a sale to AirTran Holdings, which would have meant the end of Midwest's unique culture and service. By selling to TPG/Northwest, Midwest preserves for now what makes the airline special.
But there are concerns. If Northwest eventually took control, it would have a huge share of the business at Mitchell, which is one motivation for the airline's interest. Another is playing defense. Northwest, with hubs in Minneapolis and Detroit, had a strategic interest in defending its Midwest dominance against AirTran.
Diana Moss, author of the report by the American Antitrust Institute, a nonprofit group that favors stronger enforcement of antitrust laws, told the Journal Sentinel's Tom Daykin that regulators will focus on the Northwest stake in this deal and that buyout option (www.jsonline.com/698246).
But it's not clear that a Northwest and Midwest combination, if it comes, would restrain competition at Mitchell. There is still plenty of room for growth at the airport. Since the deal was announced, AirTran has said it would expand service and the new discount carrier, Skybus, has begun flying.
We share the concerns of many travelers over Northwest's record and hope the airline has gotten the message that it has to clean up its act. The Department of Justice must ensure that travelers won't be pinched down the road by a deal that opens the door to less competition at Mitchell. If the deparment believes that will happen, it should insist on changes. Wisconsin travelers should be a priority.
But remember, Midwest had two choices once AirTran began pursuing it: capitulate or find another buyer. This deal gives Midwest a chance, at least, to preserve its culture and legacy of service for a while longer.
Should the Department of Justice approve the sale of Midwest Air Group to TPG Capital? Why or why not? Send a letter to: Journal Sentinel editorial department. To read the report, go to www.antitrustinstitute.org
A new study raises that old concern about the role of Northwest Airlines in a deal to sell Milwaukee's hometown airline. But that sale is still the better option.
From the Journal Sentinel
Posted: Dec. 25, 2007
A new study finds that the proposed sale of Midwest Air Group to a private equity firm and competitor Northwest Airlines could reduce competition between the two airlines and make it difficult for low-cost carriers to begin flying out of Mitchell International Airport.
The study raises the specter of a Northwest takeover of Midwest, which is a distinct possibility. Northwest has an option to buy out TPG Capital, the firm that is taking the lead in this dance. TPG, based in Fort Worth, Texas, would own 53% of Midwest; Northwest would own the other 47%. Federal antitrust regulators are considering the $451.8 million deal.
Northwest's involvement was always a concern for travelers because of its spotty service and on-again, off-again interest in the Milwaukee market. But it's unlikely that the Department of Justice will nix the deal, and that's probably for the best. The alternative was a sale to AirTran Holdings, which would have meant the end of Midwest's unique culture and service. By selling to TPG/Northwest, Midwest preserves for now what makes the airline special.
But there are concerns. If Northwest eventually took control, it would have a huge share of the business at Mitchell, which is one motivation for the airline's interest. Another is playing defense. Northwest, with hubs in Minneapolis and Detroit, had a strategic interest in defending its Midwest dominance against AirTran.
Diana Moss, author of the report by the American Antitrust Institute, a nonprofit group that favors stronger enforcement of antitrust laws, told the Journal Sentinel's Tom Daykin that regulators will focus on the Northwest stake in this deal and that buyout option (www.jsonline.com/698246).
But it's not clear that a Northwest and Midwest combination, if it comes, would restrain competition at Mitchell. There is still plenty of room for growth at the airport. Since the deal was announced, AirTran has said it would expand service and the new discount carrier, Skybus, has begun flying.
We share the concerns of many travelers over Northwest's record and hope the airline has gotten the message that it has to clean up its act. The Department of Justice must ensure that travelers won't be pinched down the road by a deal that opens the door to less competition at Mitchell. If the deparment believes that will happen, it should insist on changes. Wisconsin travelers should be a priority.
But remember, Midwest had two choices once AirTran began pursuing it: capitulate or find another buyer. This deal gives Midwest a chance, at least, to preserve its culture and legacy of service for a while longer.
Should the Department of Justice approve the sale of Midwest Air Group to TPG Capital? Why or why not? Send a letter to: Journal Sentinel editorial department. To read the report, go to www.antitrustinstitute.org
I want to know what TPG/Northwest’s plan for Midwest is? Does anyone have any thoughts as to what they will do with Midwest air?
Last edited by Tim34; Dec 26, 2007 at 11:31 am
#15
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My thoughts are that TPG will green light Midwest's next move for new aircraft. It will probably be the B737. Then Midwest will contract all Skyway flights to be handled by Skywest. Skyway will be history. And finally... I think Midwest will start a new focus city. I think they will look for another city that they can build brand loyalty quickly. PIT comes to mind since USAir is decreasing their operations there. These predictions may be totally off base... but they do seem plausible to me.