By Christopher Placek
Milwaukee's hometown airline known for its two-across seats and in-flight chocolate chip cookies looks like it will continue its same operations, for now.
Midwest Airlines, based in Oak Creek and the primary carrier at Mitchell International Airport, will be sold to TPG Capital, a Fort Worth, Texas private equity group, for $17 a share.,”Milwaukee's hometown airline known for its coupled seats and in-flight chocolate chip cookies looks like it will continue business as usual -for now.
Midwest Airlines, based in Oak Creek, Wis., and the primary carrier at Mitchell International Airport, will be sold to TPG Capital, a Fort Worth, Texas, private equity group, for $17 a share. The $450 million deal between Midwest and TPG, with backing from Northwest Airlines Corp., is expected to be finalized by the end of the year.
Midwest defeated a hostile takeover bid by Orlando-based AirTran Holdings Inc. that began last year. Local public opinion had been against a deal with AirTran because of a perceived loss of quality and jobs in Milwaukee, said David Krause, adjunct assistant professor of finance and director of the Applied Investment Management Program.
But travelers coming in and out of Milwaukee may have benefited from more choice and lower airfares had AirTran won the bid to acquire Midwest, Krause added.
"If the AirTran/Midwest Airlines acquisition had been allowed, we might have seen an increase in the total number of flights in and out of Milwaukee," Krause said.
AirTran, a discount airline with several north-south flights, would have combined with Midwest's east-west service to provide several more national destinations, Krause said. But there was still a concern over reduced quality in air service and the loss of jobs in Milwaukee, he said.
While the number of baggage crews may have increased with more flights as a result of a deal with AirTran, several corporate jobs at Midwest's company headquarters would have been lost. Midwest currently employs 2,657 people, according to Krause.
Marquette graduate Justin Sherman, who returned to Milwaukee Friday on Midwest, said he would choose Midwest over another carrier for its better service if the cost difference was $50 or less.
"I try to fly it whenever I can," said Sherman, an Oconomowoc resident and 2003 graduate of the College of Business Administration.
With his Midwest credit card, Sherman said he takes the airline about once a month, mainly for business.
Students also fly into Mitchell on Midwest.
Katie Holihen, a sophomore in the College of Arts & Sciences, said in an e-mail that she has flown on Midwest in the past from her home in Indianapolis.
Even though Holihen said she enjoys the "personal touches" of Alterra coffee and the cookies, she also said several of her flights have been delayed. For that reason, Holihen said she will be looking at other travel options, like MegaBus or Amtrak.
"If I hear that things have improved, I'll try flying Midwest again this year, but otherwise, I think I'd rather sit in a bus for five hours than wait in an airport for two," she said.
Marquette athletes take Midwest, among other carriers, to away competitions, so the deal could have an impact on which airlines teams take, said Mike Broeker, deputy athletic director. However, he also said the school's options are varied.
While Midwest will keep its coupled seats, chocolate chip cookies and independence, Eagan, Minn.-based Northwest could merge operations with its current Milwaukee competitor in the long run.
"Because Northwest and the private equity group in Texas are the owners of Midwest, there's a potential that Northwest can take over Midwest," Krause said. "When that happens…I would believe because they cover many of the same flight paths you would see a reduction in flights out of Milwaukee."
Because Northwest's routes in the upper Midwest are "virtually identical" with Midwest's, Krause predicted Northwest could expand into new markets and move out of old ones.
"If Northwest does become the majority shareholder of Midwest because they buy more or all of the equity from the private equity group, they will have the ability to do what they would like to with Midwest's current routes," Krause said.
Krause said he expects the deal to be approved by the U.S. Department of Justice, as have other large national airline mergers in the past four years.
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