Midwest Air Group Inc. today outlined its strategies to maximize shareholder value as a stand-alone company and rebuff a hostile takeover bid by AirTran Holdings Inc.
In an investor presentation filed with the U.S. Securities and Exchange Commission today, Midwest Air Group said the AirTran proposal rejected last month by its board of directors significantly undervalued Midwest and did not reflect the long-term opportunities to be gained by its strategic growth plan.
The Oak Creek-based parent company of Midwest Airlines also reiterated that its strategic business plan will offer superior value to shareholders by capitalizing on current industry conditions while remaining true to Midwest's commitment to customer service excellence, which earned Midwest its reputation as "The best care in the air."
In recent weeks, Midwest has announced the initial components of its long-term growth plan, which is designed to increase capacity 15 percent this year and averaging 10 per year over the next three years. The board believes the plan will provide improving levels of profitability while further enhancing service to its customers.
Midwest's 2007 initiatives include:
- An agreement with its SkyWest Airlines Inc. subsidiary to operate 50-seat regional jet service from Milwaukee and Kansas City beginning in April. Flying as Midwest Connect, the SkyWest jets will enable Midwest to add new destinations, increase frequency on existing routes and upgrade several regional routes to all-jet service. The 50-seat program is expected to generate an additional $8 million to $10 million per aircraft, with 15 aircraft being deployed in 2007.
- The addition of two MD-80 series aircraft to the Midwest Airlines fleet and one 328JET 32-seat regional jet to the Skyway fleet, expected to go into revenue service by mid-2007. The two additional MD-80s are projected to generate $40 million to $50 million in annualized revenue.
- Reconfiguration later this year of Midwest Airlines Saver Service aircraft, which feature two-by-three seating on flights to leisure destinations. The company will add several rows of the airline's two-by-two Signature Service seats to further differentiate Midwest's product in the marketplace. The reconfiguration is expected to provide up to $5 million in annualized revenue.
- The roll-out of the first of a series of service enhancements, including the March 4 launch of new Midwest Connect service between Milwaukee and Duluth/Superior and the upgrade of existing Milwaukee-St. Louis service to all regional jet service. The expansion plans will result in the addition of at least six new destinations and as many as 12 new routes in 2007, as well as an increase in employment of approximately 8 percent throughout the year, not including SkyWest staffing to operate the 50-seat regional jet program.
"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. Our loyal customers, and the communities that support our efforts, are at the heart of our growth initiatives," said Timothy Hoeksema, chairman and chief executive officer of Midwest Air Group. "We remain committed to maximizing shareholder value and continuing to provide the superior customer service that our passengers deserve."
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