While this is technically “breaking news,” we’ve all suspected something like this for months. Especially after the last TPG/Republic cash infusion given to Midwest.
This afternoon, Republic made it official. It is buying the remains of Midwest Airlines. I say, “remains” because what constitutes Midwest Airlines these days is a far cry from what most people think of when they think of “Midwest.”
Republic announced that it will acquire 100% of the equity in Midwest, in addition to TPG’s $31 million secured note from Midwest.
According to the airline’s statement,
Consideration will be $6 million in cash and a $25 million, five-year note, which may be converted to RJET stock at $10 per share. In addition, TPG will have the right to nominate a member to the Republic Board of Directors.
Under the agreement, Midwest will become a wholly owned subsidiary of Republic Airways, with the Midwest brand continuing. Midwest’s Boeing 717s will be replaced with Embraer 190 aircraft, enhancing Midwest’s ability to offer nonstop service to key destinations important to its frequent flyers.”
Well, how ’bout that?
It looks like the gang that started out with Chicken Taco has decided to add chocolate chip cookies to the mix.
So how does this help Republic? The airline has now announced that it is going to buy both Frontier Airlines and Midwest AIrlines in the span of two days. What I continue to have a problem with, and even more so now that the Midwest part has been added to the mix — how can Republic continue to operate as a regional carrier when it will now be a major entity in operations that go up against major players?
Then there is the AirTran marketing agreement with Frontier — what is going to happen to this?
My bet is that we are going to hear more about all of this before the week is over. You have to think that there was a reason the announcements were stair-stepped, and that they both came immediately on top of one another. A defensive play against another potential deal that was about to go down? That would be my guess.