AirTran Details its Plans for Midwest

AirTran Holdings Inc. on Monday took the unusual step of providing details on the number of flights and jobs it would add in Milwaukee if it completes a hostile takeover of Midwest Air Group Inc.

In a filing with the Securities and Exchange Commission, the carrier in Orlando, Fla., says it would add 74 daily departures from Mitchell International Airport, double seating capacity and add 29 destinations.

Midwest Air, which operates Midwest Airlines and regional carrier Midwest Connect, offers about 140 daily departures from Mitchell to just over 40 cities.

That increased business would create about 1,100 jobs in Milwaukee, with an initial payroll of $30 million, said Kevin Healy, AirTran vice president of planning. Midwest Air has about 2,900 airline jobs in Wisconsin.

Healy and other AirTran executives have repeatedly said their company would expand in Milwaukee if it acquires Oak Creek-based Midwest Air.

The filing offers more information, including a list of destinations and a breakdown on the types of jobs that would be created.

The filing is designed to rebut what Healy called "misinformation" from Midwest Air, whose executives have raised doubts about AirTran's plans for Milwaukee.

"We think we'll be better off if people understand what we're trying to accomplish," Healy said.

Carol Skornicka, Midwest senior vice president, said the filing was "unrealistic and inconsistent with their previous filings."

For instance, the plan calls for the combined airline to continue using the smaller regional jets that Midwest Connect now flies, she said. In the past, AirTran has said that is not economically wise, Skornicka said.

Midwest had just begun to analyze the document.

2nd hub city needed

Michael Boyd, president of Boyd Group Inc., an aviation consultant in Evergreen, Colo., said he believed the plan for expanded service outlined in the filing "is probably conservative."

He said of AirTran, "If this deal goes through, they are going to expand more in Milwaukee than they are indicating."

AirTran needs a second hub, in addition to Atlanta, to absorb many of its new jets, he said.

From the beginning, AirTran Chairman Joe Leonard and other company executives have said that AirTran wants to expand greatly out of Mitchell.

Midwest has said that shareholders - and Milwaukee - would be better off under its growth plan, which calls for Midwest to add routes mainly through an expansion of Midwest Connect.

AirTran has said that Milwaukee is underserved.

Leonard said AirTran would replace most of Midwest's wide, two-across seats with the standard two-by-three pattern of narrower seats.

By getting more passengers onto each flight and lowering fares, AirTran has said, it would draw a lot more passengers to Mitchell, including suburban Chicagoans who now use O'Hare International Airport.

Midwest Chairman Timothy Hoeksema has said that Milwaukee is not underserved, and that AirTran is making promises it cannot keep.

By 2009, AirTran said, it would offer new non-stop service to cities such as Seattle; San Diego; Rochester, N.Y.; Montreal; and San Juan, Puerto Rico.

Scott Dickson, Midwest chief marketing officer, said the assumptions that AirTran made about building traffic to several new destinations were unrealistic.

In particular, Dickson cited proposed service between Milwaukee and Rochester.

"There are about 18 passengers per day traveling in that market," he said. "They are proposing to have 234 seats available . . . that doesn't sound very realistic."

Midwest has said that AirTran would likely cut 530 jobs at the company's headquarters, including its reservation call center, and 200 mechanic jobs at its Milwaukee maintenance hangar.

In the filing, AirTran says it would keep or expand Midwest's Milwaukee-area training facilities, call center and maintenance hangar, as well as establish a marketing services center in Oak Creek.

Boyd said that sounded reasonable.

264 pilots

AirTran's projected job count includes 264 pilot positions and 396 flight attendant jobs, according to the filing. Although those flight crew positions would be based at Mitchell, they would likely be filled in part by people living outside the Milwaukee area, which is typical in the airline industry.

The other jobs would be 66 mechanics, 50 reservation agents, 315 customer service and ramp agents, and 25 managerial and administrative positions, the filing says. The initial payroll for the 1,100-plus jobs would be $30 million, and it would grow to $50 million through salary increases.

The filing is targeted to community leaders, some of whom have publicly sided with Midwest's plans to remain independent, Healy said.

AirTran also is trying to reach shareholders, who would ultimately decide whether the takeover bid is successful.

AirTran's $13.25-a-share tender offer to shareholders expires March 8, but the expiration could be delayed.

In trading Monday before the filing was made, AirTran shares fell 30 cents to close at $10.75; Midwest stock fell 10 cents to close at $13.30.

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