And we only thought AirTran was out of the competition. (No, actually we didn’t.)

This afternoon AirTran issued a press release in which it announced a new offer for Midwest Air Group.

“AirTran Holdings, Inc.,  the parent of AirTran Airways, today announced that, at the request of Midwest shareholders, AirTran has increased its offer for Midwest Air Group, to $16.25 per share in a negotiated merger transaction.

The offer includes $10.00 per share in cash and 0.6056 of a share of AirTran common stock. Based on the closing price of AAI on August 13, 2007, the total value of AirTran’s increased offer represents approximately $445 million.”

This news comes after the largest Midwest shareholder issued a statement today saying that said it was not convinced a sale to a private equity firm is a better deal than the one offered by AirTran.

Pequot Capital Management apparently told Midwest’s board that it’s not convinced the $16 cash offer per share from TPG Capital is a better deal than AirTran’s when other factors are considered.  AirTran had previously offered $15.75 per share.

The Pequot letter filed with the Securities and Exchange Commission claimed that there are a large number of synergies available in a Midwest–AirTran deal which might not be available with TPG.

Pequot managing director Steve Pigott said in the filing that TPG and Northwest may not be able to match the growth opportunities and job creation promised by AirTran.

Not surprisingly, these were basically the same arguments given by AirTran CEO Joe Leonard in this afternoon’s announcement from AirTran — as to why their offer is a better one for Midwest.

Tickers: (NYSE:AAI); (AMEX:MEH)

Technorati Tags: airline CEOs, airlines, AirTran, Midwest Airlines, TPG

In May of this year, we reported in PlaneBusiness Banter that former Frontier Airlines’ SVP Sean Menke had purchased a home in the Denver area. We were contacted by a couple of folks we know at Frontier who expressed the opinion that they hoped this meant Menke was going to return to the airline as the new CEO. I also assumed this was probably the case.

But then a weird thing happened. Menke was named to a new position at Air Canada.

Hmmm.

But it looks like our hunches and those of the Frontier employees were on target after all.

Today it was announced that Menke will return to the airline in September as CEO.

What is so strange about all this is that, for Frontier, it’s deja vu all over again.

Menke left Frontier a couple of years ago to take a position with Air Canada. Personally, it was my belief, and still is, that Menke left because the board of directors at Frontier would not give him the CEO position.

As Frontier watchers no doubt recall, current CEO Jeff Potter did exactly the same thing. He left Frontier and became the CEO at Vanguard years ago — after he felt the airline was dragging its heels — by not naming him the CEO.

Well, what do you know?

My take on the news is that this is a good move for Frontier. I think Sean is a sharp guy. And, he has that major airline experience that Jeff was lacking. I also think he is probably the one person on the planet who knows Frontier the way he does. Overall, this is a good move for the airline — which is facing big challenges on almost every flank it has.

So remember — follow those real estate closings. Never know what you may find.

Ticker: (Nasdaq:FRNT)

Technorati Tags: airline CEOs, airlines, Frontier Airlines, Sean Menke

Looks like the assumptions about  Northwest doing a deal for Midwest were true.

Friday, AirTran’s offer for Midwest was set to officially expire, but officials then had said AirTran would wait until Monday before making a final decision on an extension or change of the offer. Or a removal of the offer.

Tonight, it looks like AirTran is out, and Northwest is in, along with some help from a familiar source — TPG.

According to a release issued late tonight, Northwest Airlines has confirmed it is a passive investor in the acquisition entity that TPG has created to pursue an acquisition of all of the outstanding shares of Midwest Air Group, Inc. at $16 per share. The bid submitted by TPG is subject to the satisfaction of “certain conditions.” Total value of the offer is roughly $400 million.

The TPG offer was presented to the Midwest Air Group board of directors today.

According to the release, NWA, which is providing financing to facilitate the transaction, will not participate in the management or control of Midwest should TPG acquire Midwest. The previously announced codeshare agreement between NWA and Midwest Airlines will remain in place and the two airlines will explore cost reduction activities such as joint fuel purchasing.

And the most important part, from what we understand — Midwest CEO Tim Hoeksema gets to stay put as the head of the new privately-held entity.

If this deal goes through, and at this point, I don’t see why it won’t, this will be the second major merger strike out for AirTran and Joe Leonard. Three years ago the airline lost out to Southwest Airlines as they sought  a potential deal with ATA.

And, as expected, Joe Leonard is not going down without a fight. Today he was quoted in the Milwaukee Journal-Sentinel.

“Leonard said AirTran’s purchase of Midwest Air would have resulted in a big increase in air travel from Milwaukee’s Mitchell International Airport, as well as a major surge in local hiring for the airline.”

According to Leonard,  “Instead, the Midwest board has chosen a path that will benefit current senior management by selling out to a private equity firm and a so- called ‘passive’ investor whose involvement will surely raise antitrust concerns, casting doubt for shareholders on whether a transaction can, in fact, close,” Leonard said, referring to Northwest’s involvement.”

He continued, “Furthermore, private equity investors are laser focused on generating short-term returns and the only way to accomplish that goal is to slash costs by cutting back on service and eliminating jobs,” Leonard said. “If the Midwest board is successful in selling the company to a private equity investor, the Midwest employees should be concerned about their job security and Midwest’s customer service is sure to suffer.”

Reports tonight say a formal agreement is expected to be announced by Wednesday.

Tickers: (AMEX:MEH), (NYSE:NWA), (NYSE: AAI)

Technorati Tags: airline CEOs, airlines, AirTran, Midwest Airlines, Northwest Airlines, TPG

Midwest Air Group announced tonight that it has entered in to an agreement with TPG Capitol to sell the Milwaukee-based airline holding company for $16 per share in cash. This comes just hours after AirTran allowed its hostile tender offer to expire.
No mention was made of any other investors, such as the “passive” investor mentioned by AirTran, in Midwest’s statement, but The Milwaukee Journal Sentinel is reporting that the investment group does include Northwest Airlines.
AirTran’s offer was valued at $15.75, a mix of cash and AirTran stock. Midwest Air Group is the parent of Midwest Airlines and Skyway Airlines.
We’re still waiting for comments from Chip the Cookie, the Midwest Airlines mascot.
[Read “Private equity group to buy Midwest Air” at The Milwaukee Journal Sentinel.]

Next time you fly not only will you have to pull out your laptop and put it in a grey plastic bin, but you’d better put most any other electronic device you carry in there as well.

True?

False?

True. Only don’t expect the TSA officials to know what the hell is going on for the next few days. And we all know what that means.

According to Joe Brancatelli this morning,  effective at 12:01 a.m., Saturday, August 4, “the TSA will require travelers to remove the following items from their carry-on bags and submit them for separate screening: video games, video cameras, DVD players and CD players. They will now be treated like laptop computers. You’ll have to remove them from your carry-on and run them separately through the X-ray machines.”

And yes, I’m sure the airlines are cursing the TSA under their breath this morning. According to a couple of folks we pinged this morning, nobody was given advance notice of the new rules.

Midwest Airlines said this afternoon in a statement that it has entered into confidentiality agreements with four potential suitors. Yes, four. (Okay, so we only show two in our pictorial. The other two must be in the closet.)

Yes, I would imagine this means AirTran and three other parties that will remain unnamed. For the time being.

Anyone else think the recent events  at Frontier may be somehow related to the goings-on at Midwest? That bigger fish eating the smaller fish eating the tiny fish syndrome as I was talking about in PBB last week?

Okay so it’s Friday and I’m in my conspiracy mentality.

More later. PBB is in final edits. We should post no later than 6 p.m. CDT.

Ticker: (AMEX:MEH)

Technorati Tags: airlines, AirTran , Midwest Airlines

Late, after-close press release tonight announcing the departure of Frontier Airlines’ CEO Jeff Potter. According to the release,

“Frontier Airlines Holdings, Inc. (Nasdaq: FRNT – News) today announced that its President and Chief Executive Officer, Jeff Potter, will resign to accept a new position outside of the airline industry. Potter has been Frontier’s President and CEO since April 2002 and has been with Frontier in various capacities since 1995. Potter’s new position will be announced next week and his resignation will be effective after Frontier’s annual stockholders meeting on September 6, 2007. The Frontier Board of Directors has commenced a search for his successor.”

Potter, who according to the release has accepted another position outside of the airline industry, will remain a member of the airline’s board of directors.

Whoa boy. This is one CEO position that I would not want to take on. The airline, which is on our PlaneBusiness Titanic Watch, just announced yet another set of weak quarterly earnings numbers last week.

Ticker: (Nasdaq: FRNT)

Technorati Tags: airlines, Frontier Airlines

Not directly airline related, except that we have a lot of readers in the MSP area — the I-35W bridge going across the Mississippi River in Minneapolis collapsed sometime after 6 p.m. CT. The bridge apparently connects the University of Minnesota area and the Metrodome. (And yes, the Minnesota Twins are playing at home tonight.)

Unfortunately reports say the bridge collapsed during the height of rush hour, when traffic was apparently “bumper to bumper.”

Hot off the presses.

“The Board of Directors of Southwest Airlines today announced details of its new employment contracts with Executive Chairman Herb Kelleher, President and Corporate Secretary Colleen Barrett, and Vice Chairman and CEO Gary Kelly.

    — Herb Kelleher, 76, will continue as Executive Chairman of the Board for

      one year and will step down from that position at the Company’s 2008

      Annual Meeting of Shareholders.  Kelleher is a Founder of Southwest

      Airlines and has served as Executive Chairman since 1978.  From 1981

      through June 2001, Kelleher also served as President and CEO of

      Southwest Airlines.

 

— Colleen Barrett, 62, will continue as President for one year and will

      step down from that position on July 15, 2008.  Barrett has served as

      Secretary of the Corporation since 1978; Vice President Administration

      from 1986 to 1990; Executive Vice President Customers from 1990 to

      2001; and President since 2001.

— Gary Kelly, 52, will remain as CEO with a contract expiration date of

      February 1, 2011.  Kelly began his career at Southwest Airlines as

      Controller in 1986; was named Vice President Finance and CFO in 1989;

      Executive Vice President and CFO in 2001; and CEO and Vice Chairman in

      July 2004.

 

After relinquishing their current management and Board positions in 2008,

Kelleher and Barrett will remain for five years as Employees of the airline

they nurtured from the very beginning, working fulltime at the Company’s

Dallas headquarters.

    “After 41 years as an Officer and Director of Southwest Airlines, I will

be resigning from those positions as of our Shareholders’ meeting in May

2008,” Kelleher said.  “Why?  Because our organizational transition that began

in 2001 will then be complete and because I have unalloyed respect for, and

confidence in, our CEO Gary Kelly and his superb cadre of Southwest Officers.

Southwest’s future is bright — and so are they!

    “The People of Southwest have always been my pride, my joy, and my love.

Their indomitable dedication and esprit de corps have taken Southwest from a

three-airplane dream to a 500-airplane reality.  I am grateful that I will

continue to have the opportunity to work with our People and to bask in their

good humor and excellence for many years to come,” he said.

    Barrett said, “Though I will be resigning as Corporate Secretary and a

Board Member as of our May 2008 Annual Shareholders’ meeting and from my

management position (i.e., President) as of July 15, 2008, I am delighted that

I will still be able to practice/follow my Customer Service passion and

continue the work that I absolutely LUV:  serving the Internal and External

Customers of Southwest Airlines.  Southwest is characterized by the high

spirits of its Employees and its industry leading Customer Satisfaction

record.  The ‘business of business’ is ultimately about People, and I am very

proud of the fact that Southwest’s humanistic focus has served as a luminous

beacon in this respect.

    “I have been very blessed over the last 40 years of my career — blessed to work with — and for-the most caring, most altruistic, and most giving People that anyone has ever been fortunate enough to meet.  Those years have been a true ‘Labor of LUV.’  My heart tells me it is time to allow the next generation of SWA Leaders their day to lead.  I have always thought that one of the best traits of a Leader is to know when to follow.  And, I am looking forward to following the example set by this new Leadership generation and to continuing ‘to live the Southwest Way’ for several more years,” she said.

    Kelly said both Kelleher and Barrett have helped make Southwest Airlines

one of the most studied corporate success stories in the history of American

business.

    “I, along with all of our 33,000 Southwest Employees, will be forever

grateful for Herb’s visionary Leadership and gritty entrepreneurship,” Kelly

said. “Corporate America knows that Colleen is the force behind our cherished

family culture and enviable Customer Service record.”

    “I know every Employee joins me in promising Herb our continued dedication

to the cause he loves — giving Americans the Freedom to Fly and providing job

security and a great place to work for our Employees,” he said.  “I am

grateful to both of them for their friendship, mentorship, and commitment to

the future success of Southwest Airlines.  We are all fortunate to continue to

have them as an important part of our Southwest Family.”

Ticker: (NYSE:LUV)