AirTran ups ante for Midwest Airlines
A day after US Airways sweetened its unbidden takeover offer for Delta Air Lines, discount airline AirTran Airways upped the ante in its equally unwelcome bid to merge with Midwest Airlines. Somebody is serious about airline consolidation out there.
What was a $290-million offer by AirTran to take over Midwest is now a $345-million tender, a 19 percent hike. In addition, AirTran is taking its case directly to Midwest Airlines' shareholders, doing an end-around on Midwest management, which wants the carrier to remain independent.
In a letter to Midwest's board of directors, Joeseph Leonard, AirTran CEO, said: “You gave us no choice but to bring our offer directly to the owners [i.e., the stockholders] of the company.” Leonard says AirTran boosted its bid to buy Midwest because he believes a combined carrier “will generate the value necessary to justify our increased offer”.
US Airways is taking a similarly tangential tack in trying to take over Delta, appealing to the bankrupt airline's creditors, rather than directly to the company. Delta says it too wants to remain an independent entity.
How all of this plays out over the next few weeks could impact the price consumers pay for air travel, and the options they have to fly. A successful AirTran/Midwest merger might fly under the industry radar screen, and not prompt a “final” round of airline consolidation. However, a US Airways/Delta combination is all but certain to trigger similar mega-mergers which could cut competition, and hike fares.
© Cheapflights Ltd Jerry Chandler