Midwest Banks On Growth To Thwart AirTran Bid

Midwest Airlines has one month to rally its defenses to counter AirTran Airways' hostile takeover bid, and tactics could include issuing stock that would make the carrier less affordable to AirTran. However, Midwest senior vice president and chief marketing officer Scott Dickson today said the main approach is persuading shareholders that Midwest's stand-alone plan—not nuptials with AirTran—offers more value.

"We've had contact with the shareholders and meetings with institutional investors, and, broadly speaking, what we're hearing is they don't think there's a deal to be done at the current price," Dickson said.

AirTran last week extended the deadline for Midwest shareholders to approve a deal to March 8 from Feb. 8 in its appeal to gain shareholder support. Dickson said Midwest management and its board of directors oppose the offer, even after AirTran upped its bid last month to $345 million from $290 million.

With regards to the possibility of issuing the poison pill—a move that would make the carrier less affordable to a hostile bidder—Dickson said, "It's in the arsenal, along with the laws in the state of Wisconsin, which are pretty unique about unsolicited or unwelcome takeovers of businesses. We have a fair amount of protection in this state. Those are the fundamental things. It's a matter of the board continuing to do the good, solid due diligence they've been doing. The best defense is to execute on our plan and let our shareholders know that the guidance we've issued is something we're serious about."

Dickson stressed the level of growth the carrier hopes to achieve on its own. Midwest this year plans increase capacity by 21 percent, partially by adding new routes. Dickson said Duluth/Superior-Milwaukee and Seattle/Tacoma-Kansas City are set to launch in March and April, respectively. "We'll roll out more as the year goes by," Dickson said, but would not disclose other new routes.

The carrier also in April will begin executing a five-year agreement with SkyWest Airlines, which this year will operate 15 50-seat regional jets for Midwest. The deal allows for up to 25 jets to be used for Midwest Connect service, supplementing regional service already operated by wholly owned Skyway Airlines.

Also contributing to its capacity growth, Midwest is upgrading several turboprops to jets, adding frequency on some existing routes and "right-sizing" its fleet, "so we'll be able to better match capacity with demand, and that will drive positive things in our bottom line," Dickson said.