Wed, Dec 13, 2006
Merger Mania Continues Even Among Budget Carriers
ANN REALTIME REPORTING
12.13.06 1430 EST: US Airways's bid for Delta rocked the
airline industry last month, and serious talks between United and
Continental prove merger talk isn't just a few crazy executives
selling snake oil. Now it's not just the biggies involved; Budget
carrier AirTran said on Wednesday it's offered to buy rival airline
Midwest.
AirTran's offer is a serious one. Its $290 million bid amounts
to $11.25 per share in cash and stock and represents a 24% premium
over Midwest's closing price on Tuesday.
In its offering, AirTran says a merger would create an airline
boasting $3 billion in revenue in 2007. It also says Airtran and
Midwest could save as much as $60 million between them.
AirTran's CEO Joe Leonard told Reuters his airline first made an
offer for Midwest in late October. Midwest showed no
enthusiasm for the idea at the time.
On Wednesday, Leonard sent a letter to Midwest reiterating its
October offer saying it was prepared to "sit down and enter into
serious discussions and, following that, consider in our offer any
enhanced values that may be demonstrated."
Industry observers see mergers as inevitable in a market flooded
with a plethora of carriers at the end of a bad economic cycle.
Many carriers have gone through the pain of reorganization and hold
the debt to prove it. That makes them ripe targets for a hostile
bids.
Merger offers are rampant around the world. Ryanair in
Ireland has bid seriously for Aer Lingus, and Qantas has had offers
from several interested investment groups.
AirTran's Leonard said he hopes Midwest will reconsider his
airline's offer and enter serious negotiations.
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