AirTran, Midwest to meet

AirTran Airways said executives will meet with the board of takeover target Midwest Airlines on July 16 to make their case for a merger.

"We plan to review, in detail, the benefits of a merger of our two companies, and then move expeditiously to effect a definitive merger agreement," AirTran CEO Joe Leonard said in a statement.

Midwest, at its annual shareholder meeting this month, agreed to allow a board briefing by AirTran. But no date had been immediately set.

Midwest said the briefing will allow AirTran to makes its case but will not be a negotiating session.

AirTran's hopes for a deal were buoyed when Midwest shareholders elected three new AirTran-backed members to the Midwest board.

While they are a minority on the nine-person board, it's expected they will add to the pressure on Midwest to open negotiations.

So far, Midwest's board and management has rejected AirTran's merger offer, first made privately last year and then launched publicly via a tender offer last winter.

Separately, airline stocks rebounded from early declines to notch gains Thursday after an industry trade group reported mixed pricing and revenue data for May and crude oil prices reversed course to finish lower.

The Amex Airline Index added less than 1 percent to finish at 50.92 points, with only two of the 11 component stocks trading lower.

The Air Transport Association said the airline industry's yield, or pricing, on domestic routes declined in May by 1.5 percent, though it increased strongly on international routes.

That was ahead of a forecast calling for flat to 1 percent higher by Merrill Lynch analysts.

Domestic capacity, measured in available seat miles, appears to have shrunk 2 percent as carriers move to match a slowing revenue environment, according to the analysts.

The analysts predicted that American Airlines, Delta Air Lines, United Airlines and US Airways would cut mainline domestic capacity.

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