Clash of Cultures: Priorities differ at AirTran, Midwest

AirTran managers are doggedly pursuing what would be the first hostile takeover among low-cost carriers


But Midwest pilots were slow to endorse the airline's stand-alone business plan, and their resistance to AirTran has been muted. They had been alienated by Midwest's decision to outsource regional flying to SkyWest and threatened a strike in 2000.

"The labor groups at Midwest have been conspicuously quiet," said Darryl Jenkins, head of the Aviation Institute at George Washington University. "It's an entirely different situation than we saw at Delta."

Gary Chaison, a labor relations professor at Clark University in Massachusetts, said AirTran's task is manageable because turmoil in the airline industry has made it unrealistic for airline workers to expect to spend their entire careers at a single carrier.

"Workers are more focused on keeping their jobs than loyalty to any particular carrier," he said. "They've been through numerous furloughs. Their pay has been dramatically reduced. Airlines don't provide lifetime employment the way they once did, so workers' loyalty is more directed toward maintaining the professional standards of their crafts than they companies they work for. If a merger can provide greater stability, employees will welcome those changes."

Labor relations lawyer Lowell Peterson agrees.

"The social contract between airlines and their employees is pretty tattered these days," he said. "Airline employees used to have tremendous pride in being part of an airline family like Pan Am or Eastern. That doesn't really exist anymore."

AirTran has said it will eliminate Midwest's spacious all-business-class leather seating, fresh-baked cookies and other such amenities.

Michael Boyd, a Colorado airline consultant, said two-by-two seating in coach and other perks were rapidly disappearing anyway as Midwest added economy seats to planes that fly primarily on leisure routes.

"AirTran will bring more jobs, more flights and more job security," Boyd said. "When employees see that, it will take some of the sting out of the fact that it was a hostile takeover.

"Midwest employees will have to get new uniforms," he said, "but they'll be relieved they won't have to get new jobs."

AIRTRAN

* Emphasizes low prices.

* Wants to fly to more cities and create more jobs.

* Is trying to gain three seats on the Midwest board of directors.

MIDWEST

* Emphasizes high level of customer service.

* Provides all-business-class seating and fresh-baked cookies.

* Has rallied customer and political support to keep the airline locally owned.

THE STORY SO FAR

OCTOBER 2006

AirTran CEO Joe Leonard meets Midwest CEO Tim Hoeksema and offers to buy the Milwaukee-based carrier.

DEC. 7, 2006

Midwest's board formally rejects the AirTran offer.

DEC. 13, 2006

AirTran publicly launches a hostile bid for Midwest at $11.25 a share, or $288 million, a 24 percent premium at the time. Midwest later rejects the offer as "inadequate and opportunistic."

JAN. 11, 2007

AirTran raises its offer to $13.25 a share, or $345 million. Midwest rejects the sweetened bid.

APRIL 2

AirTran boosts its offer to $15 a share, or $389 million, and says it won't raise it again.

MAY 16

AirTran gains the support of 57 percent of Midwest shareholders, but Midwest retains the right to use Wisconsin anti-takeover laws to block a transaction.

JUNE 14

AirTran plans to install three directors on the Midwest board at Midwest's annual shareholder meeting.



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