If AirTran Holdings Inc. is successful in its hostile takeover bid to acquire Midwest AirGroup Inc., it will have a significant impact on local tourism and the way people travel to and from Milwaukee.
A sampling of business leaders in southeastern Wisconsin indicates the majority do not believe that an AirTran takeover of Midwest Air Group would be good for Milwaukee, but they think the acquisition is inevitable, nonetheless.
Small Business Times asked 18 local business leaders to respond to some questions about AirTran’s plans to acquire the Oak Creek-based parent company of Midwest Airlines.
According to the unscientific poll, more than half (10) believe AirTran’s acquisition would not be good for Milwaukee, while only two believe it would be good for the community, and six gave answers that were not conclusive.
The vast majority of respondents (13) believe that AirTran will not live up to its promises to remain as supportive of Milwaukee’s nonprofit sector.
Finally, more than half (10) believe that an acquisition of Midwest is inevitable.
The survey was executed after AirTran chairman and chief executive officer Joseph Leonard made his pitch to the Milwaukee business community at the Rotary Club of Milwaukee’s luncheon on July 17.
Here are a few of the comments by local executives about AirTran’s proposed acquisition of Midwest. (More complete responses are posted at www.biztimes.com.)
“Their (AirTran’s) management team has proven that they do not keep promises, a basic character element required in our Milwaukee communities by the local market. AirTran is, in my opinion, a ‘cattle car’ approach to transporting people. I believe that Midwest can and does make money for its shareholders, and it creates a sustaining demand from its growing customer base that also sells it by referral to other customers in local and outside markets. Furthermore, Midwest’s staff really does care about the people it serves every day. This is hard for someone in distant Atlanta to understand.”
– David Kliber, president and CEO, S-F Analytical Laboratories Inc., Milwaukee.
“I don’t believe it will be good for Wisconsin. We will be loosing a corporate headquarters which will be difficult to replace. Additionally, Midwest Air has a vested interest in this community, due to their presence. AirTran will likely not have the same community involvement.”
– Daniel Jessup, president, Grubb & Ellis|Apex Commercial, Brookfield.
“Midwest would likely be swallowed up by AirTran and lose the uniqueness that has made it great. Midwest is committed to Milwaukee and its future, I don’t feel AirTran would have the same commitment.”
– Dorothy Krupa, vice president of Internet banking, North Shore Bank, Brookfield.
“It should give us an expanded selection of flights.”
– George Dalton, chairman and CEO of Novo 1 Inc., Brookfield.
“AirTran has a profit motive to increase flights from Milwaukee because they want to compete for passengers from northern Illinois who now may fly out of O’Hare. As a by-product, this strategy will clearly benefit Milwaukee passengers who desire more direct flights from MKE. But this same strategy is currently being executed by Midwest. If there must be a merger, I wish Midwest were buying AirTran with (Midwest CEO) Tim Hoeksema as the resultant CEO.”
– Jack MacDonough, president of the Bradley Tech High School Foundation and former chief executive officer of Miller Brewing Co. Milwaukee.
“I think ultimately it will be bad. People take great pride in having a great local airline, and I fear that being part of Airtran is going to drastically reduce the quality of the flights in and out of Milwaukee.”
– Kirk Strong, principal and sales, marketing and media expert, Smart Inter@ctive Media, Mequon.
“I do think this will happen, and if not, it will happen with another deal. I also don’t believe the overall service will suffer. Currently, most of Midwest’s flights are not signature service.”
– John Koss Jr., vice president of sales, Koss Corp., Milwaukee.
“AirTran is a different culture, not at all like Midwest. Midwest is unique, AirTran is not.”
– Paul Cunningham, owner, Schreiner’s Restaurant, Fond du Lac.
“Midwest gives Milwaukee part of its national identity. This will change way more things in this community than our air travel service. Their current level of service will not be retained and will become just a part of the best ‘cattle carrier’ in the air.”
– Steve Haas, president, EGX Group, West Allis.
“Poorer service. Less attention to Milwaukee’s needs. Risk of loss or diminution of frequent flyer miles.”
– David Riemer, director of the Wisconsin Health Project.
“I continue to believe a ‘white knight’ is a possibility. If it satisfies business egos to purchase newspaper properties with little potential, then it could be even more satisfying to purchase a high-quality airline like Midwest. I think there still is a possibility that Midwest could remain independent or under non-AirTran ownership, especially since the offer to shareholders is for a combination of AirTran stock and cash, rather than all cash.”
– Roger Stafford, chief financial officer, Key Milwaukee magazine.
“I have no reason to doubt Joe Leonard’s statements on jobs, destinations or passenger volume. But he misses a big part of the equation and demonstrates a lack of understanding of Midwest Airlines’ strength. He said almost nothing about the passenger experience (DOT rankings for baggage handling or JD Power ratings notwithstanding). The reason I fly Midwest is the airline’s focus on my traveling experience – whether it’s cookies, wide seats, friendly staff or convenience. If AirTran wins, I’m no more likely to fly AirTran than I am to fly Northwest or Delta.”
– Jeff Fleming, vice president of public relations, Zizzo Group Advertising and Public Relations, Milwaukee.
“If AirTran increases Midwest’s financial strength, does not dismantle Midwest’s corporate structure and keeps the same level of service while increasing flight options, the acquisition could be a good thing. If they change the culture, level of service and move jobs out of Milwaukee, (then it would be a bad thing).”
– Gary Zimmerman Jr., president, Creative Business Interiors, West Allis.
“I do not think an AirTran buyout would be good. Inevitably, firms make over the companies and cultures of those they buy. As they say, a fox knows many tricks, a skunk but one. AirTran is successful because they are a well-operated, cheap carrier, but they are not a Southwest Air. With few exceptions, Midwest’s personnel and approach is user-friendly. When I fly AirTran (which I do a few times a year), there is not the same service. Seats are crowded and cramped.”
– Bob Chernow, Milwaukee business executive.
“Whether it be AirTran or someone, someday it will happen, unless the Midwest management team can take it private.”
– Michael Houser, chief executive officer of Cascio Interstate Music, New Berlin.
“This has been going on for months now and they keep sweetening the pot every few weeks, inching closer and closer to a buyout. What surprises me is the fact that other local area businesses have not stepped up in support of Midwest and tried to help distribute information to shareholders about what they will be giving up on. I understand that they have their own companies/ businesses to look after, but standing up against this takeover would set a nice precedent.”
– Andy Stanislaw, software administrator for a local printing company, Wauwatosa.
“No. Midwest Air Group has been such a supportive, strong corporate partner in our community. This is due to its local ties. It is unlikely that AirTran would be able to maintain the relationships and contributions that Midwest Air Group has made. AirTran simply does not have the personal connection to southeastern Wisconsin, its people or businesses.”
– Heidi Mayer, vice president of the Lutheran Home Foundation, Wauwatosa.