AirTran Holdings, Inc. (NYSE: AAI), the parent company of AirTran Airways, announced that Joe Leonard, AirTran chairman and chief executive officer, and Bob Fornaro, AirTran president and chief operating officer, sent a letter to the shareholders of Midwest Air Group (Amex: MEH)
ORLANDO, Fla. – The letter is relating to the exchange offer AirTran has commenced as part of its proposal to combine AirTran with Midwest.
The complete text of the letter is set forth below:
January 18, 2007
Dear Midwest Shareholder,
We recently sent you information about AirTran Holdings Inc.’s offer to exchange for $13.25 — consisting of $6.625 in cash and 0.5884 of a share of AirTran common stock as determined as of the time of our offer — for each share of Midwest Air Group that you own. Please review those documents carefully and thoroughly. In this letter, we would also like to provide you with some background information, so that you may better understand why we are convinced that AirTran offers superior value for your investment.
For several months, AirTran has tried to engage Midwest management in discussions concerning the merits of combining the two companies and the benefits it would bring to all Midwest stakeholders. Midwest’s Board and management have, however, declined our requests to explore such a combination. Even after December 13th, when we made our proposal of October 20, 2006 public, the reply was that the „ball was in our court“. As we saw it, the next step was to bring our offer directly to you, so that you, the owners of Midwest, would have the opportunity to act in your own financial interests. We have now done so.
When you review AirTran’s offer (also available at http://www.airtran.com/midwest/default.aspx), you will see that it not only provides you with a significant premium to Midwest’s stock price before we made our offer public, but also that it offers you the upside potential of continuing to own shares in a combined AirTran and Midwest. We believe the merged company would be a stronger, truly national low-cost carrier offering a high quality product that would generate improved profit potential through a number of revenue and cost synergies. The combined carrier will be better able to succeed in an increasingly competitive environment; it would expand service in Milwaukee and Kansas City; and provide more low fares to more cities. We also expect the combined company to create more jobs and increase advancement opportunities for employees of both airlines, and increase the economic benefit of travel and tourism to the cities in which AirTran and Midwest currently operate.
[GADS_NEWS]By contrast, we ask you to read the strategic plan that Midwest filed on January 10, 2007 which demonstrates the Midwest management’s determination to continue Midwest as a standalone carrier. In our view, this would leave Midwest highly vulnerable to competitive incursions from both larger carriers with costs restructured in bankruptcy and to the inevitable expansion of low cost competition. We believe the effect of these increased levels of competition would be exacerbated by the relatively modest size of Midwest and the increasingly burdensome cost structure that its fleet of older, less fuel- efficient aircraft will entail. Moreover, if you look at Midwest’s record over the past five years, it is clear that existing management has been unable to achieve anything approaching consistent profitability. Is the possibility of more of the same really what you as a shareholder are comfortable with for the future?
A combination with AirTran will result in a carrier with not only a superior product but the fleet and cost structure to compete with anyone.
This is your opportunity to speak directly to your Board. Tender your shares pursuant to AirTran’s offer, and let your Board know that you want them to sit down and negotiate a merger agreement with AirTran.
If you have any questions about AirTran’s offer, we urge you to contact your broker, banker or other financial advisor, or Innisfree M&A Incorporated which is assisting us at (877) 456-3422.
Sincerely,
Joe Leonard
Chairman and Chief Executive Officer
Bob Fornaro
President and Chief Operating Officer
Shareholder questions regarding the exchange offer or requests for offering materials should be directed to Innisfree M&A Incorporated at (877) 456-3422. (Banks and Brokers may call collect at (212) 750-5833.) Offering materials are also available on the SEC’s website at http://www.sec.gov. Midwest shareholders are urged to read the offering materials filed by AirTran, which contain important information about the exchange offer.
