YX802

All the AirTran supporters need to deal with the reality you LOST the hostile takeover attempt. Just suck it up and move forward building a "world class low fare airline" as Joe Leonard planned.

YX802

I recall the question of a break-up fee being posed by a reporter during the web cast held the day after the agreement. If my memory serves me correctly, none exists.

Tim34

LOL LOL

Tim34

I think the deal is as good as done but TPG/ NWA are going to have to change something. If I were them I would get rid of skyway airlines and dump some of those smaller destinations in northern WI that are not that profitable. I would also limit long haul flying as much as possible. With fuel at $100 how profitable is a flight from MKE to the west coast even if it is full on an MD-80 (I have no clue, help)? On a recent flight from MKE-SEA on Midwest I saw a flight attendant throw away sealed pretzels from customers who did not want them. I also saw tons of extra cookies just sitting around. Midwest needs to become more cost effective.

YX802

I agree Tim, and I think they will make some changes quickly. They didn't get to be a 30 billion dollar company by investing in companies that are barely turning a profit. Who knows, we may even be welcoming you back aboard a Midwest flight someday. I'll be looking forward to those new 737s or A320s along with many other passengers and employees.

BondAir007

I thought this must be interesting image..considering of the deal.

Midwest and NWA.

www.startribune.com/photos/?c=y&img=3midwest0107.jpg

-BondAir

Tim34

Thats exactly how the planes will look. LOL. So true

dhuey

Well if that's true, you can make a small fortune by buying a whole lot of call options on MEH. http://finance.yahoo.com/q/op?s=MEH&m=2008-04

A lot of investors with a lot of money at stake don't agree with you that this is good as done. The market is saying that there is substantial risk this deal will fail.

Tim34

That is a good point. Although I will need to hear something more concrete that investor fears before I write this deal off. Is their any sign that either the DOT or NWA is having any serious either problems or second thoughts about this deal?

captaink

Since NWA won't recieve any voting rights on the BoD, I doubt it. If the NW/DL merger rumors are true, there may be a problem. A combined NW/DL with a large portion of YX would more or less dominate the upper midwest IMO...

dhuey

There's no reason at all to write this deal off. Indeed, I think the odds are slightly in favor that it will close. It's just a question of how much risk of failure there is. Investors have different ideas about that, but their collective wisdom right now is that there is a big risk of failure ($14.22 share price vs. $17.00 tender offer).

By the way, the critical agency here is the DOJ (Justice), not DOT (Transportation).

Tim34

While this article does border on scare tactics it is worth looking at
By JAY SORENSON
Posted: Jan. 6, 2008

I believe within four years, Midwest Airlines will cease to exist as an independent entity. Northwest Airlines did the math and found it was cheaper to buy a small competitor than to risk the entry of AirTran Airways as a low-cost carrier smack in the middle of its so-called Heartland market area.
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In this case, Northwest is strategically incapable of being a passive investor with TPG Capital. The experience at Duluth, Minn., may highlight why passivity is already a myth.

Midwest announced new flights to Duluth early in its takeover battle. The service was designed to connect Duluth with the Midwest network. Northwest had a lock on daily service prior to Midwest's three daily round trips. One other airline served Duluth, and it only operated flights on Wednesdays and Saturdays to Las Vegas.

Midwest began the Duluth service on March 4, 2007. The takeover involving Northwest was revealed on Aug. 12. On Oct. 19, Midwest announced it would drop Duluth. The city's business newspaper didn't mince words: "Northwest ownership likely affected Midwest decision to exit Duluth."

The following describes snippets of dialogue that could occur in Northwest's boardroom during the next four years:

Question: Why do we and Midwest have full staffing at these airports?

Answer: Let's look at merging operations and laying off some Midwest staff.

Question: Why does Midwest offer its own frequent flier program? Would we not achieve greater marketing power with WorldPerks as the only program for Milwaukee?

Answer: Of course, eliminating the Midwest program would give WorldPerks dominance.

Question: Why is Midwest competing with us on routes where we traditionally have dominated?

Answer: We can start by having Midwest drop Boston and Seattle and see how it goes. I think Milwaukee travelers really don't have a better choice than Northwest.

The final act of this play will be the de-hubbing of Milwaukee and the death of the Midwest brand - and here's the quote that will justify the move: "We tried over the years to keep Midwest as a standalone airline and to preserve its unique product. However, the financial challenges of the airline industry simply prevent us from maintaining this. But rest assured, Northwest is committed to the Milwaukee market."

I think we need to remind ourselves: Northwest has an unfortunate history of abandoning Milwaukee.

Glance at a map of the United States and decide for yourself. Does Northwest really want a fourth hub between Minneapolis, Detroit and Memphis? I think not. And if it merges with Delta (that's the rumor), you can add Cincinnati to the Heartland map.

Don't fool yourself. The leadership at MillerCoors already has connected the dots when comparing Milwaukee's aviation future with that of Denver (it has two hub airlines).

Sadly, we are in grave danger of losing the great economic engine of an airline hub in Milwaukee. I hope Milwaukee's leadership awakens to the fact that vital economic interests are at stake. Watching, waiting and hoping does not make a place great.

flyYX

This is what I fear the most with NWA having a financial stake in Midwest. If NWA and Delta merge, then I think the new Delta will have to divest CO and YX. Maybe it will be CO and YX merging. I think 2008 will be a crazy year for the airline industry.

tvnwz

Stock valuation today only plays a minor role in this transaction. You have to remember that this is a private transaction with no stock trading on the stock exchanges after the deal goes through. So, today's stock value is not as big a factor as the value of any stock that would be offerred if Midwest were to ever issue stock again in the public markets.

dhuey

I agree, since the stock price now is mostly a function of the odds that the $17 deal goes through. It's also a function of investors' guesses on how far the stock would drop if the deal were to fail. April puts at $12.50 are currently trading for $1.05, which suggests a view that the price would fall to $10 or so.

The minor role the stock price might still play is that TPG/NWA might think that the stock price provides some useful information on how much they're overpaying for Midwest.