A sampling of business leaders in southeastern Wisconsin indicates the majority do not believe that AirTran Holdings Inc.’s hostile takeover of Midwest Air Group Inc. 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 questions were asked after AirTran chairman and chief executive officer Joseph Leonard made his pitch to the Milwaukee business community at the Rotary Club of Milwaukee’s noon luncheon on July 17.
The following are the responses to the SBT questions about AirTran’s proposed acquisition of Midwest. SBT invites readers to respond to these comments at the end of the blog.
Daniel Jessup, president, Grubb & Ellis|Apex Commercial, Brookfield
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"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."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"No, I don’t believe they will have the same commitment to the non profit sector. Once again, with their corporate offices elsewhere, AirTran will be another large, national company with a regional presence in Milwaukee."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"Yes, I believe it is inevitable."
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Steve Haas, president, EGX Group, West Allis
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"No. 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."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"Is it a legal promise? If it is, and I can’t believe it is, what makes it binding? I do not believe they will."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"With 60 percent of the shares being tendered for the deal, it does appear an uphill battle to stay independent. I think they would have to do something like M&I (Bank) did a number of years and find someone like NML (Northwestern Mutual Life) to buy about 25 to 30 percnet of them to scare away any pursuers."
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David Kliber, president and CEO, S-F Analytical Laboratories Inc., Milwaukee
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"NO! It will hurt our communities and Wisconsin too, because AirTran does NOT really care about our community, and the quality of their business model is poor relative to Midwest’s. Their 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. Midwest is also a part of the fabric of our community … the convention center, events and the cookies …. and it is also something that we all sell as a good part of moving to and staying in Milwaukee. We need positives for the Milwaukee 7, and Midwest Airlines has been one for many years. If Air Tran were to move its headquarters here and retain the Midwest logo and business model as a subsidiary under local Midwest executive leadership, perhaps there could be some support from the business and general communities here in southeastern Wisconsin. Unless they approach it that way, Air Tran will be my last choice for flying."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"No. They will do donations to charity events just to show well, but it will drift away in the future because they are in headquartered in Atlanta and not Milwaukee."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"Unfortunately, yes, because too many shareholders are from outside of this community and cannot understand the importance of retaining this great business model here."
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Dorothy Krupa, vice president of Internet banking, North Shore Bank, Brookfield
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"No. Midwest Express 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."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"Perhaps for a while, but if cuts were needed to be looked at, I feel Milwaukee’s nonprofit sector would be one of the first items to be cut."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"I hope not!"
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Jack MacDonough, president of the Bradley Tech High School Foundation and former chief executive officer of Miller Brewing Co. Milwaukee
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"I prefer Midwest to remain separate and headquartered in Milwaukee, but I don’t fear Air Tran … 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."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"I trust Hoeksema far more on promises of civic involvement for two reasons: he has a track record of doing so, and he lives here. I only wish that someone on AirTran’s executive team in Orlando would personally support Milwaukee’s HeartLove Place as Tim and his family have done."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"I don’t think this deal is inevitable, but consolidation is the flow of a free consumer driven market. I just regret that a byproduct of consolidation is pain for employees and managers. I wish Tim H. could run the combined airline."
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George Dalton, chairman and CEO of Novo 1 Inc., Brookfield
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"Yes. It should give us an expanded selection of flights."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"Yes."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"Yes."
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Kirk Strong, principal and sales, marketing and media expert, Smart Inter@ctive Media, Mequon
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"No, 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."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"Probably not, since most companies who aren’t headquartered in the same city eventually reduce their commitment to local causes."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"Unfortunately, yes."
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John Koss Jr., vice president of sales, Koss Corp., Milwaukee
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"Not sure it will affect biz in Wisconsin one way or the other."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"I believe what they say."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"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."
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Paul Cunningham, owner, Schreiner’s Restaurant, Fond du Lac
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"No. AirTran is a different culture, not at all like Midwest. Midwest is unique, AirTran is not."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"No. More importantly, do I believe AirTran will provide the service Midwest is famous for? No."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"No."
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David Riemer, director of the Wisconsin Health Project
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"No. Poorer service. Less attention to Milwaukee’s needs. Risk of loss or diminution of frequent flyer miles."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"No."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"No."
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Roger Stafford, chief financial officer, Key Milwaukee magazine
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"Yes and no. Since AirTran is buying gates and presence here, I would suspect that Mitchell (International Airport) would have an increase in the number of flights, locations, etc., at the start. Over time and through the continuing cycles of air traffic, my feeling is that the initial benefits would fade and that our air options would be less than if Midwest continued as the primary service. Having an airline based here, even one of the smaller systems, is a plus for the region. It puts Milwaukee in a league with much larger cities and far ahead of cities of the same size. It’s good for business throughout southeastern Wisconsin. Midwest’s quality reputation also is something that strengthens the business community. The current (Midwest) management’s business plan seems to maintain that quality image, something that seems missing in the AirTran plan."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"No. Corporations do not have an unlimited amount of funds to spend on goodwill. Atlanta will get the bulk of the charitable contributions. Milwaukee’s nonprofits will get fewer roundtrips on AirTran for their silent auctions. And if they do get a contribution, the auction purchasers will be willing to bid far less for cramped seats than they now bid for ‘the best care in the air.’ Operations like the Midwest Center, Milwaukee 7 and other economic development efforts, which technically are nonprofits, are unlikely to receive the support they have received from Midwest. I don’t find AirTran’s contention of continued support credible."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"Not sure. 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."
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Jeff Fleming, vice president of public relations, Zizzo Group Advertising and Public Relations, Milwaukee
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"I don’t know whether an AirTran acquisition would be good for southeastern Wisconsin. 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. And what we all lose is the good feeling that comes from traveling on Midwest Airlines. What could he have said? How about saying that AirTran can learn a lot from Midwest Airlines about developing a positive relationship with its customers. A simple statement like that would have gone a long way toward winning over a skeptical audience."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"One other disappointing part of his (Leonard’s) presentation is the lack of understanding of Midwest’s role as a corporate citizen. It is more than just a corporate headquarters or the jobs that Midwest provides. It’s the civic involvement, charitable activity, and community leadership that top people at Midwest Airlines have offered. Very little was said about that in (Leonard’s) speech."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"Is the acquisition inevitable? Well, it’s highly likely. And ultimately, the deciding factor is not my opinion or the opinions of my fellow Rotary members. The deciding factor is how much AirTran is willing to spend to buy a public company."
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Bob Chernow, Milwaukee business executive
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"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."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"My guess is that the promises that have been made will fall by the wayside of acquisition. Who knows what AirTran will do with the nonprofit sector? Midwest has used this to the mutual advantage of charities and themselves."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"No, I do not believe a buyout is inevitable, but then, I believed (Scooter) Libby, (Richard) Cheney and (Karl) Rove that they did not out Mrs. (Valerie) Wilson!"
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Gary Zimmerman Jr., president, Creative Business Interiors, West Allis
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"The answer to this is, ‘unknown.’ 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)."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"Yes, it’s just good for business."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"Yes, at some point, the return on investment is too high for corporate stock owners not to take."
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Michael Houser, chief executive officer of Cascio Interstate Music, New Berlin
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"While the current structure of ownership with Midwest is fine, I think the airline, at some point, will either sell or be forced to sell. Being a publicly held company, businesses are always at the mercy of the shareholders, with performance measured by quarter, at the very least. If the industry metrics change and the consumer environment alters, the shareholders, by and large, have little appetite for losses. If the airline industry ‘tanks,’ shareholders would likely be more interested in unloading Midwest, as opposed to what may be good for Milwaukee. The cookies and leather seats are nice, but at the end of the day, it’s about profitability, and when you are public, that’s what the market cares about – unfortunately, in many cases."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"They could. Look at Miller (Brewing), as an example. Still great community-company, based in (London, England)."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"Whether it be AirTran or someone, someday it will happen, unless the Midwest management team can take it private."
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Andy Stanislaw, software administrator for a local printing company, Wauwatosa.
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"I think any time a larger company swoops in and plucks a highly recognizable business out of your city/state, it’s not a real good thing. Midwest is continuously voted the nation’s best airline, bringing national recognition to the little homegrown planes jetting in and out of Mitchell International. Which is clearly what AirTran is looking for here – that name and that recognition."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"Yes, but strictly as a PR move. It’s one of those promises that they will hang their hats on for a few years, but will most likely put less and less effort into as time goes by."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"Unfortunately, yes. 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."
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Randall Hoth, president and chief executive officer of the Better Business Bureau of Wisconsin
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"Yes. Lower cost airfare market from Milwaukee."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"No."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"Yes."
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Heidi Mayer, vice president of the Lutheran Home Foundation, Wauwatosa
Do you believe that AirTran’s acquisition of Midwest Air Group would be good for southeastern Wisconsin?
"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."
Do you believe AirTran will live up to its promise to remain committed to Milwaukee’s nonprofit sector?
"No."
Do you believe AirTran’s acquisition of Midwest is inevitable?
"Sadly, yes."
