Midwest board rejects buyout plan by AirTran

<p>Midwest Air Group Inc.'s board of directors again recommended on Friday that shareholders reject a buyout offer from rival AirTran Holdings Inc., setting up a showdown at Midwest's shareholder meeting in June.</p><p>The board of the Milwaukee-based operator unanimously rejected the buyout worth about $389 million, calling it "inadequate" and saying its future is more profitable alone. Shareholders were advised not to tender their shares to AirTran Holdings, owner of low-cost carrier AirTran Airways.</p><p>The rejection means there could be a showdown at Midwest's annual shareholders meeting, which the company announced on Friday had been pushed back to June 14.</p><p>"The board was very strong in its recommendation," said Midwest spokeswoman Carol Skornicka.</p><p>Orlando-based AirTran has courted Midwest shareholders for more than a year, boosting its bid from an initial offer of $78 million.</p><p>AirTran Chairman and Chief Executive Joe Leonard had said the offer, worth about $15.75 a share in cash and stock as of Thursday, would be the company's last.</p><p>Bob Fornaro, president and chief operating officer at AirTran, said Midwest can't can thrive in the industry on its own, but that he wasn't surprised by the rejection.</p><p>AirTran envisions the two companies combined would create a low-cost national carrier with 1,000 departures a day in 74 cities, generating revenues of $3.5 billion a year.</p><p>Midwest's focus on using smaller, regional jets, often with 50 seats or less, won't work in the long-term, Fornaro said.</p><p>He pointed out that Midwest also announced on Friday it was lowering its earnings expectations for the year from $1.70 per share to a range of $1.30 to $1.50, a figure that still falls in line with Wall Street projections.</p><p>Skornicka said the lower earnings reflect a bumpy first quarter that included a series of storms that disrupted air travel.</p><p>Shares of Midwest fell 17 cents, or 1.16 percent, to $14.45 midday Friday on the American Stock Exchange, while shares of AirTran fell 8 cents to $11.48 on the New York Stock Exchange.</p><p>The latest offer expires May 16. Fornaro said AirTran believed investors would still be tendering their shares, despite the board's rejection. As of earlier this month, 1.7 million shares _ roughly 7 percent of Midwest's stock _ had been tendered, AirTran reported.</p><p>AirTran has already nominated three members for election to Midwest's nine-member board of directors.</p><p>Midwest's rejection of the bid was not surprising but it was unfortunate because the combination could provide more low-fare service to a market like Milwaukee, said Michael Boyd, president of The Boyd Group, an aviation consulting firm in Evergreen, Colo.</p><p>Smaller airlines with smaller planes do serve a niche, he said, but it's not a market that a company should build a future on.</p><p>"There's a place for those kind of airplanes, no question, but it's a declining place," Boyd said.</p><p>___</p><p>On the Net:</p><p>HASH(0x1cde57c)</p><p>HASH(0x1cde624)</p>

http://accesswdun.com/article/2007/4/101774