Republic Airways Holdings said it is acquiring Midwest Airlines from private equity firm TPG Capital and expects the deal to close after gaining final regulatory approval within six weeks.
Republic in a statement said it would pay $6 million in cash and a $25 million, five-year note. Midwest also noted reaching "out-of-court settlements with its principal unsecured creditors," recently obtaining $12 million in debt financing from TPG and Republic, "completing the necessary milestones to enable this acquisition."
Republic chairman, president and CEO Bryan Bedford in a statement today said the Midwest brand would be maintained as a wholly owned subsidiary of Republic Airways Holdings, which also owns regional carriers Chautauqua Airlines, Republic Airlines and Shuttle America.
TPG Capital, backed in part by Northwest Airlines, in 2007 purchased Midwest amid the carrier's efforts to fend off merger attempts by competitor AirTran
(BTNonline, Aug. 17, 2007). Rick Schifter, a partner with TPG Capital, in a statement today said, "At the time we acquired Midwest, we envisioned that it would ultimately become part of a larger airline and network, as the ability to operate as a small, independent carrier is increasingly challenging in this economic environment." TPG noted it would maintain "a strategic stake in Republic."
Republic said it would transition Midwest to an all-Embraer fleet, replacing some Boeing 717s. "Midwest will be the only U.S. carrier to offer coast-to-coast service with two-across seating and no middle seats throughout its fleet," Bedford said.
"We recognize that increased competitive activity in Milwaukee will require us to stay close to customers and cost-effectively provide what they want in terms of service quality to a variety of markets," Bedford said. "We will be exploring options to restore and enhance service to various cities as a critical piece of Midwest's historic, strong brand promise, which was strained by the effects of record fuel costs in 2008 and the deep economic downturn in 2009."
"Republic can bring operational and cost efficiencies to Midwest that we, as a stand-alone carrier, could not leverage," said Midwest Airlines chairman and CEO Timothy Hoeksema, who will leave the organization as Bedford transitions to CEO of Midwest upon completion of the deal.