Sends Second Letter To Midwest Shareholders Urging Review
Of Offer
Midwest Airlines' cold
response to AirTran's merger offers hasn't deterred AirTran
chairman and CEO Joe Leonard -- he's more determined than ever to
make the deal a reality. The resolute AirTran executive has
taken out full-page advertisements in regional newspapers, courted
local officials and appealed directly to passengers and
shareholders.
As ANN reported, AirTran
recently upped its original merger offer from $290 million to $345
million, and Leonard tendered that offer directly to Midwest
shareholders after his original offer its board met with a flat
refusal.
Under AirTran's latest offer, Midwest shareholders will receive
$13.25 -- consisting of $6.625 in cash and 0.5884 of a share of
AirTran common stock -- for each share of Midwest.
Late last week, Leonard sent another letter to Midwest
shareholders urging them to carefully review AirTran's offer. In
this latest letter, Leonard explained why he made his offer
directly to them. He said Midwest's management refused to explore
the merger offer leaving him no choice but to appeal directly
to shareholders.
As part of his pitch, Leonard says, "The combined carrier will
be better able to succeed in an increasingly competitive
environment; it would expand service in Milwaukee and Kansas City;
and provide more low fares to more cities. We also expect the
combined company to create more jobs and increase advancement
opportunities for employees of both airlines, and increase the
economic benefit of travel and tourism to the cities in which
AirTran and Midwest currently operate."
He warned Midwest's shareholders their smaller airline --
with about 3,500 employees -- has what he described as
"an increasingly burdensome cost structure" because it operates
older, less fuel-efficient aircraft. He says this will make
competition from larger airlines inevitable -- especially freshly
restructured airlines emerging from bankruptcy.
Leonard also said Midwest doesn't have a particularly stellar
earnings record saying, "...if you look at Midwest's record over
the past five years, it is clear that existing management has been
unable to achieve anything approaching consistent profitability. Is
the possibility of more of the same really what you as a
shareholder are comfortable with for the future?"
Midwest's recently announced expansion plan calls for a 15
percent capacity increase this year including six new destinations.
It's just entered an agreement with SkyWest to operate several
Canadair Regional Jets. Last year, Midwest posted a profit for the
first time since 2003.
Leonard closed by urging Midwest's shareholders to talk to
their board. "This is your opportunity to speak directly to your
Board. Tender your shares pursuant to AirTran's offer, and let your
Board know that you want them to sit down and negotiate a merger
agreement with AirTran."
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