AirTran Boosts Offer for Midwest Air

A Midwest plane is parked at Gen. Mitchell International Airport, Thursday, Jan. 11, 2007, in Milwaukee. AirTran Holdings Inc. appealed directly to shareholders Thursday with its sweetened offer of about $345 million in cash and stock for rival Midwest Air Group Inc. after the regional carrier rebuffed an earlier takeover attempt. (AP Photo/Morry Gash) (Morry Gash - AP)

MILWAUKEE -- AirTran Holdings Inc. appealed directly to shareholders Thursday with a sweetened offer of about $345 million in cash and stock for rival Midwest Air Group Inc. after the regional carrier rebuffed its earlier unsolicited takeover bid.

AirTran Holdings, which owns the discount carrier AirTran Airways, raised its offer for Midwest Air Group by almost 18 percent. Midwest said its board will evaluate the latest offer and make a recommendation to shareholders with 10 days.

"We certainly believe the consolidation has started in this industry and will continue and that Midwest is vulnerable," AirTran Chairman and Chief Executive Joe Leonard said during a visit to Milwaukee.

Airtran's renewed effort to buy Midwest Air comes only a day after US Airways Group Inc. raised its bid for Delta Air Lines Inc. to by about 20 percent to $10.3 billion. Delta had rejected the previous offer and opposed to the takeover bid.

After years of losses following the Sept. 11 attacks in 2001, the industry has begun regaining its balance. Critics of consolidation say fewer carriers could mean higher prices for air travelers.

The new offer for Midwest Air Group was equivalent to $13.25 per Midwest share, based on the closing price of AirTran common stock on Monday and represented a premium of almost 3 percent over the airline's closing share price on Wednesday.

AirTran earlier bid $11.25 per share for Midwest Air Group, but the Midwest board turned down that offer on Dec. 6, prompting the Orlando, Fla., discount carrier to bypass the board in its latest takeover attempt.

"We thought we would get no more consideration than we've gotten so far. We thought we'd let the owners decide," Leonard said.

Carol Skornicka, Midwest's senior vice president of corporate affairs, said the airline had been expecting another offer from AirTran, but expected the company to come back to the board. She said it was somewhat surprising that AirTran made the improved offer "directly to shareholders at this stage."

Midwest Air Group climbed to a new 52-week high of $13.48 before closing at $13.40, up 50 cents, or 3.9 percent, on the American Stock Exchange. Airtran shares rose 48 cents, or 4.03 percent, to finish at $12.40 on the New York Stock Exchange.

The offer consists of $6.625 in cash and 0.5884 shares of AirTran common stock for each Midwest share.

Midwest Air Group, which operates Midwest Airline and Midwest Connect, promotes itself as "the best care in the air," with its wide leather seats and chocolate chip cookies baked on board.