In the wake of another offer by AirTran (AAI), Midwest Airlines (MEH) outlined its strategy to maximize shareholder value as a stand-alone company, last week. AirTran upped its offer to $345 million in cash and stock, compared to its original offer of $290 million proposed last month. (RAN, December 18, p.1) AirTran, which is making the offer through its wholly owned subsidiary Galena Acquisition Corp is trying to play Midwest's shareholders against the Milwaukee-based airline.

Midwest's plan calls for a 15 percent increase in capacity this year which will average 10 percent per year over the next three years and provide improved levels of profitability.

Part of its plan, includes the assignment of 50-seat jet flying to SkyWest (SKYW) from both the Milwaukee and Kansas City hubs and the addition of new destinations and frequencies for existing routes using the regional airline. Midwest expects the new partnership will yield an additional $8 million to $10 million per year, per aircraft with the 15 aircraft scheduled to go into service this year as well as an additional 10 aircraft set to enter service after the first year. It is also adding MD-80s to its fleet along with an additional Fairchild 328 regional jet which is destined for the fleet operated by its wholly owned subsidiary Skyways. Two MD80s are expected to bring in $40 million to $50 million per year.

It also plans to roll out a series of service enhancements including the March 4 launch of new Midwest Connect servicd between Milwaukee and Duluth and the upgrade of existing MKE-St. Louis service to regional jets.

Its expansion plans will result in the addition of a least six new destinations and as many as 12 new routes this year as well as an increase in employment of approximately eight percent throughout the year. This does not include any SkyWest staffing to operate the 50-seat jet program.

Longer term, the company is conducting a strategic review of other significant options which it sees as value enhancing, including the replacement of its MD-80 fleet.

"All of our plans reflect our dedication to providing customers with a truly differentiated travel experience at a time when other airlines have commoditized flying," said Chair and CEO Timothy Hoeksema. "We remain committed to maximizing shareholder value and continuing to provide superior customer service."