Midwest Airlines (MEH) and Northwest (NWACQ) signed a memorandum of understanding for the two to become code-sharing partners, expanding the carriers’ networks by 250 city pairs and more than 1,000 new flight options. Midwest said the new agreement was the next step in its year-long roll out of its 2007 growth plan and noted it was expected to enhance the value of the carrier for shareholders
“This code share is an expansion of the successful reciprocal frequent flyer relationship between Midwest and Northwest that began in May 2006," explained Scott R. Dickson, Midwest Airlines senior vice president and chief marketing officer. He pointed out that this is the largest code share Midwest has entered into in its 23-year history.
Northwest routes that will include the Midwest Airlines "YX" code are destinations beyond Northwest's hubs at Detroit, Minneapolis/St. Paul and Memphis. Midwest will also place its code on Northwest flights from Indianapolis, a Northwest focus city. Additionally, Midwest's code will appear on a number of Northwest-operated flights to Hawaii and Alaska.
Routes operated by Midwest Airlines that will carry the "NW" Northwest code are flights that connect at Midwest's Milwaukee and Kansas City hubs, as well as Omaha – a Midwest focus city. Northwest will also code share on Midwest Airlines-operated flights between Milwaukee and Kansas City to Atlanta, Boston, Hartford, Los Angeles and San Francisco that connect to the Northwest/KLM trans-Atlantic network and trans-Pacific network.
Proxy Fight
Meanwhile, as AirTran (AAI) crowed about shareholders agreeing to tender 13.9 million shares to its acquisition company, representing a 56.6 percent stake, Midwest stated that ownership has not changed given the requirement for several significant actions needed by the Midwest board for those conditions to be met, including waiving the provisions of Wisconsin law that protect Wisconsin corporations from hostile takeovers. AirTran said it is extending its latest tender offer of $15 per share for the third time until June 8. At the same time a major shareholder, Octavian Advisors, LP, called on the board to open talks with AirTran. The move by shareholders, said the alternative investment firm was a “clear indication of the desire of Midwest's owners for the board of directors to immediately engage in productive and good faith negotiations to effectuate a transaction. We do not believe going through a proxy contest at the annual meeting – a contest that Midwest appears likely to lose – is the best way to combine these two great airlines. The time has come for this transaction."”
“Nothing has changed as far as control of Midwest Air Group is concerned; no shares have been purchased by AirTran," said Carol N. Skornicka, Midwest senior vice president, general counsel and secretary. "The exchange offer is subject to numerous conditions. Regardless of the number of shares tendered, AirTran would not purchase shares unless those conditions are waived or are satisfied."
Midwest's board unanimously recommended rejection of AirTran's most recent exchange offer for a number of reasons, including its firm belief that the offer is inadequate and that it does not take into account the long-term value of Midwest's strategic plan.