‘You don’t have a hometown airline anymore’

    The Midwest Airlines web site (www.midwestairlines.com) still lists the address of the company’s headquarters as 6744 S. Howell Ave., Oak Creek.

    But changes made to Midwest Airlines, which was acquired by Indianapolis-based Republic Airways Holdings in July, have rendered it a "virtual airline," according to airline industry consultant Michael Boyd, president of Evergreen, Colo.-based Boyd Group International Inc.

    "(Midwest Airlines) is a brand," Boyd said. "It exists as a brand. That may be the wave of the future, I don’t know."

    Republic has been replacing the Midwest Airlines flight crews and aircraft. Midwest Airlines’ final group of Boeing 717 jets and the crews that operate them will be replaced by Republic crews and aircraft on Dec. 1. With the changes, Midwest will lay off 120 pilots and flight attendants, along with about 50 other employees.

    "While there will still be airplanes flying with ‘Midwest’ written on them, there will no longer be any of the pilots who truly provided ‘The Best Care in the Air’ operating them," said  Capt. Anthony Freitas, chairman of the Midwest Airlines unit of the Air Line Pilots Association International. "All of the original Midwest flight crews are being outsourced in the final phase of dismantling our airline. Midwest’s new owner hopes that if they keep the same paint scheme and cookies, no one will notice that the crews who helped build our airline’s well-deserved reputation for award-winning customer service are gone."

    The replacement of the flight crews and the aircraft is why Boyd calls Midwest a virtual" airline.

    "You don”t have a hometown airline anymore because all of the flights are being operated by Republic Airlines crews and will be on Republic Airlines planes," he said.

    But James Reichart, director of advertising and brand for Midwest Airlines, points out that the company continues to have 1,100 to 1,200 employees in the Milwaukee market.

    "Some corporate functions have naturally begun to align with our new parent company, Republic Airways Holdings, to eliminate duplication," Reichart said. "’Virtual airline’ is a nice catchphrase, but the reality is kind of tied up in the arcana of the airline biz. There is still a corporate entity called Midwest Airlines, a wholly owned subsidiary of Republic Airways Holdings. What’s in transition is which aircraft in the combined Republic fleet will be on the Midwest routes. We’re retiring the Boeing 717’s as part of our overall restructuring begun last year, which leaves that FAA operating certificate without aircraft to accompany it, since the routes are being flown with Republic E170’s/E190’s, which are already on their own operating certificate. What’s important to customers, travel agencies, etc. is that the Midwest brand, our YX airline code and other assets of the airline continue without interruption, just in a slightly different way behind the scenes. All of these changes, along with work we’re doing with our sister airline, Frontier, will enable us to provide customers with the service they need, at the low fares they expect to pay, and still make a profit."

    With all of the changes under Republic, Boyd says Midwest Airlines employees would have been better off if the company’s board of directors in 2007 had approved the hostile takeover attempt a few years ago by AirTran.

    "Many of them would probably still have their jobs," he said.

    The Midwest board rejected the AirTran bid and instead opted sell the company to TPG Capital, a private equity group based in Fort Worth, Texas, for about $450 million in 2007, with Northwest Airlines owning a 47-percent share of the deal. The acquisition turned out to be a really bad investment for TPG and Northwest, because Republic bought Midwest this year for just $31 million.

    In March, AirTran chief executive officer Robert Fornaro said he was happy that his company had failed in its hostile takeover bid of Midwest Airlines. AirTran has been slowly adding flights in Milwaukee and building a mini-hub at Mitchell International Airport.

    Boyd said the decision by Midwest to reject the AirTran takeover offer was, "I think misguided management that did not recognize the Midwest product was gone and didn’t work any more."

    However, to be sure, the decision to sell for a higher price to TPG provided a splendid windfall for investors in Midwest’s stock, including the members of Midwest’s board and management team.

    Meanwhile, AirTran has assumed a much higher profile in the Milwaukee community. For example, Bryan Bedford, chief executive officer of Republic, recently agreed to be nominated to serve on the Metropolitan Milwaukee Association of Commerce (MMAC) board of directors.

    Republic Airlines recently acquired Denver-based Frontier Airlines through the bankruptcy process. Republic executives say the company may consolidate its operations that could result in the shift of hundreds of jobs from Denver and New Mexico to Indianapolis or Milwaukee. Officials in Denver, Milwaukee and Indianapolis are hoping to convince the company to place those jobs in their communities.

    However, Boyd said Milwaukee’s chances of landing those jobs are slim because Republic is headquartered in Indianapolis and it has significantly scaled back its business operations in Milwaukee.

    "If it’s going to go anywhere it’s going to go to Indianapolis," Boyd recently told the Indianapolis Star.

    Republic might move "something else" to the Midwest Airlines offices in Oak Creek, Boyd said.

    "In terms of (the Oak Creek office complex) being an airline headquarters, that role is gone," he said.

    "With due respect to our old friend Mr. Boyd, he’s flat wrong on the jobs question," Reichart said. "While Republic’s corporate headquarters are in Indianapolis, the types of jobs we’re talking about require large specialized facilities which we already have in Milwaukee, which means those jobs could legitimately end up here. What we’re doing is looking at the whole Republic enterprise, which has three geographic locations (Indianapolis, Milwaukee, Denver), and determining which functions can most efficiently be performed in each location."

    Andrew Weiland is the managing editor of BizTimes Milwaukee.

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