In what seems to be becoming a monthly event, AirTran Airways on Wednesday extended its tender offer for Midwest Airlines.
It was the second such extension since AirTran launched a hostile, $345 million bid in January --- and it may not be the last.
"We're very patient suitors," AirTran spokesman Tad Hutcheson said Wednesday. "Time is working in our favor."
Milwaukee-based Midwest has consistently rebuffed AirTran's efforts to merge the two carriers. But AirTran says it's undeterred and could extend its offer indefinitely, as long as it complies with Securities and Exchange Commission rules and does so in 30-day increments. The new offer expires April 11.
Airline industry analysts have cheered AirTran's bid, saying it would create a national discount rival for Southwest Airlines. The move would also allow Orlando-based AirTran to extend far beyond its Atlanta hub, which currently accounts for two-thirds of the airline's capacity.
AirTran is rapidly expanding its aircraft fleet with long-range Boeing 737s, but its passenger growth has trailed recent increases in capacity. AirTran's efforts to buy Midwest have received a chilly reception from Midwest shareholders.
AirTran said Wednesday it had received commitments from shareholders to sell 1.7 million shares, or less than 10 percent of Midwest's outstanding stock.
Carol Skornicka, Midwest's general counsel, said Wisconsin law provides broad protection from hostile takeovers. State law there encourages Midwest to consider the best interests of "all stakeholders," including employees, customers and the local community --- and the Wisconsin public appears determined to resist AirTran.
"Wherever you go there are expressions of support for keeping Midwest independent," she said. "Everyone wants to know what they can do to help, and we just tell them to keep buying tickets. We're integrated into the fabric of the community here in a way that's unique."
AirTran officials have traveled to Milwaukee frequently to tout the benefits of a merger and promise more daily flights, lower prices and higher employment. But such appeals have had no visible effects so far.
AirTran says its public relations efforts in Wisconsin are aimed at preparing the marketplace and its future work force there, and that the company doesn't expect broad public support. The success or failure of its takeover bid will be determined in financial centers like New York --- not Milwaukee.
AirTran officials say Midwest stock ownership is quietly shifting from small, private owners to large hedge funds and professional investors looking for quick returns. That works to AirTran's advantage, company officials say, because such investors are likely to vote their shares in favor of a merger when the time comes.
AirTran also says its efforts to install three sympathetic board members are likely to be backed by large investors. Once installed, those members will put pressure on what it calls Midwest's "entrenched" management and board to seriously consider a deal.
"The election of these three nominees would send a strong signal that the company's 'stay-the-course,' 'business-as-usual' strategy --- multiyear losses, less service, fewer jobs and lower wages for employees --- is unacceptable," AirTran Chairman and Chief Executive Joe Leonard said Wednesday. "By continuing along that path, the company is placing its employees, customers and communities, as well as its shareholders, at risk to the competitive pressures that are already threatening Midwest."
Midwest usually holds its annual meetings in April but can delay the gathering until July.
Midwest's Skornicka said Wednesday the company hasn't set an annual meeting date.
Midwest stock was on a roll before AirTran announced plans to buy the company. Since then, it has risen about 55 percent --- an expression of confidence, Midwest says, in its future growth prospects.
But AirTran officials say Midwest's high stock price gives AirTran leverage, too.
AirTran officials say their standing offer to buy Midwest is artificially boosting Midwest's share price.
If AirTran were to pull out, company officials say, Midwest stock would fall, and large investors who recently bought in would be stuck with the consequences.
AirTran officials say the big investors likely to decide the outcome typically wait until the last possible moment to tender their shares.
When the time is right, AirTran officials say that they will announce a final offering price and date, and they're convinced Midwest shareholders will respond favorably. Until then, they'll bide their time.
"We like where things stand," Hutcheson said. "What's happening right now is very advantageous to us."
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