Midwest Airlines is trying to fend off AirTran's takeover bid with a rapid growth plan, but its uninvited suitor is not ready to give up.
AirTran Airways has raised its bid by almost 20% to $345 million in an open-ended offer it is taking directly to Midwest shareholders instead of seeking a deal with management of the Milwaukee-based carrier. Orlando-based AirTran derides the Midwest plan, which centres on touting its business-focused service while increasing flights on its 32-seat regional jets to destinations such as Duluth, Minnesota. Midwest also has signed a deal with SkyWest to operate up to 25 Bombardier 50-seat CRJs to feed its Milwaukee and Kansas City hubs.
AirTran chief executive Joe Leonard says Midwest's growth plan, which includes adding more Boeing MD-80s, relies on "old planes, and planes no- one else wants" and CRJs "provided by a third party". Midwest says the moves will add six destinations this year, increasing capacity by as much as 15% and boosting revenue by $50 million. Chief executive Timothy Hoeksema says the plan stresses "a truly differentiated travel experience at a time when other airlines have commoditised flying".
But AirTran's Leonard argues the two carriers combined would reap a $60 million increase in revenues and that the "differentiated experience" of leather seats and baked on-board cookies for which Midwest is famous is an "unrealistic vision". The carrier, previously known as Midwest Express, is still vulnerable, deriving nearly one-quarter of its revenues from just five markets, Leonard says.
Midwest's growth plan "relies on old planes, and planes no-one else wants"
Source: Airline Business
