AirTran Holdings Inc. believes it's making progress in persuading the largest shareholders of Midwest Air Group Inc. to go along with AirTran's hostile takeover attempt, Chairman Joe Leonard said Friday.
Leonard, speaking to a reporter after the company announced its fourth-quarter earnings, said AirTran executives have spoken "numerous times" to Midwest Air's 20 largest shareholders, who together control around half of the company's stock. Leonard believes most of those shareholders are inclined to accept AirTran's offer of $13.25 a share.
Leonard said most of those institutional investors have not divulged whether they will tender their shares to AirTran before the cash-and-stock offer expires on Feb. 8.
But, he added, "We've got a very positive feeling from them."
Most of the institutional shareholders contacted by the Journal Sentinel since the takeover battle started in December have declined to comment on the matter.
Midwest Air spokeswoman Carol Skornicka said any discussion of whether the shareholders will accept AirTran's offer amounts to speculation.
"The real test will come on Feb. 8," said Skornicka, senior vice president of corporate affairs at the Oak Creek-based company, which operates Midwest Airlines Inc. and Midwest Connect.
When the offer expires, AirTran is required by law to disclose how many shares have been tendered to the company. AirTran also has the option of extending the offer.
Even if it falls short of a majority of the shares, Leonard hopes AirTran can secure enough shareholder support to force Midwest Air's board to negotiate a sale of the company. The board this week recommended that shareholders not accept the offer, which it called inadequate.
AirTran two weeks ago raised its offer from the initial price of $11.25 a share.
AirTran reported Friday a fourth-quarter loss of $3.3 million, or 4 cents per share, as higher fuel prices and other expenses overshadowed an increase in revenue. AirTran's loss, which compared with a break-even performance from the fourth quarter of 2005, was in line with analysts' forecasts. Revenue was $461.9 million, a 12.7% increase from $409.9 million.
For the full year, Orlando-based AirTran earned $15.5 million, or 17 cents per share, a 92.1% increase over $8.07 million, or 9 cents per share. Revenue was $1.89 billion, a 30.5% increase over $1.45 billion.
Midwest Air reported Thursday fourth-quarter net income of $3.6 million. For the full year, Midwest Air earned $5.4 million.
Midwest Chairman Timothy Hoeksema cited those earnings as proof that the company's growth plan is working, and Midwest shareholders are better off not accepting AirTran's buyout offer.
Leonard said comparisons between Midwest Air's quarterly profit and AirTran's loss will have little effect on whether Midwest shareholders decided to accept the buyout offer.
He said the company's fourth-quarter earnings were partly affected by rival Delta Air Lines Inc. adding passenger capacity in Atlanta, AirTran's biggest hub. Delta has since said it will reduce capacity at its Atlanta hub, which analysts said will benefit AirTran.
After its earnings were disclosed, AirTran's stock closed Friday at $11.16, down 34 cents. Midwest stock closed at $12.93, up 26 cents.
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