AirTran Holdings
Encyclopedia
AirTran Holdings was a Nevada corporation
, based in Orlando, Florida
, United States, that operated as an airline
holding company
. Its primary asset was AirTran Airways
until Southwest Airlines
acquired AirTran on May 2, 2011.
, ValuJet Airlines
suffered serious financial problems. On July 11, 1997, ValuJet announced it would merge with the much smaller Airways Corporation, the owner of Orlando, Florida
based AirTran Airways
. In November 1997, AirTran announced it would move its headquarters to Orlando from Atlanta; on November 17, 1997, AirWays Corp. and ValuJet completed their merger and the name ValuJet was dropped.
On January 6, 1999, the board of directors of AirTran announced that Joseph Leonard had been elected to the position of Chairman, Chief Executive Officer, and President of the company.
On August 15, 2002, AirTran stock began trading on the New York Stock Exchange
.
-- owner of Midwest Airlines
and Skyway Airlines
which operates as Midwest Connect
-- and had asked the board negotiate a sale of the company. That AirTran offer in 2005 was rebuffed by Midwest's board, which also rebuffed a second offer in late 2006. In December 2006, AirTran disclosed the rejection of both offers in hopes of bringing shareholder pressure on Midwest's board to reconsider, which the board recommended that shareholders reject.
On December 13, 2006, AirTran announced that it had made an offer to acquire Midwest Airlines, another operator of the Boeing 717. The offer has since been rejected by the Midwest board. On January 11, 2007, AirTran sweetened its offer for Midwest to $13.25 a share from $11.25 a share, valued at US$
290 million, or a 24% premium over Midwest's trading price at the time, and AirTran took its renewed bid directly to Midwest shareholders, bypassing Midwest's board of directors; with an offer that expires on April 11, 2007. On April 2, 2007 AirTran raised its bid to $15 a share, in what CEO Joe Leonard called AirTran's final bid.
In response to AirTran's overtures, Midwest Air Group has stated publicly that it believes that it can maximize shareholder value as a stand-alone company. Midwest Air Group has said that the latest AirTran proposal rejected by its board of directors significantly undervalued Midwest and did not reflect the long-term opportunity inherent in its strategic growth plan. The company also has reiterated that its strategic business plan will offer superior value to shareholders by capitalizing on current industry conditions while remaining true to Midwest's commitment to customer service excellence.
On January 11, 2007, AirTran Holdings increased its bid for Midwest to $345 million in cash and stock, an 18% increase from their previous offer.
On February 2, 2007, AirTran again raised its bid for Midwest to $389 million in cash and stock ($9 in cash and .5842 shares of AirTran stock totaling $15 a share). CEO Joe Leonard stated that this would be AirTran's final bid.
In May 2007, an independent securities expert William McGinnis, CFA, published an analysis of Board of Director responsibilities related to hostile takeover offers. He utilized the AirTran offers for Midwest Airlines as the basis for this case study which is available here.
AirTran was successful in having its slate of 3 board members elected to the Midwest Air Group's board of directors in the election on June 14, 2007 at the Midwest annual meeting.
On August 12, 2007, it was announced that AirTran had lost the bid for Midwest. A private equity group, headed by TPG Capital and including Northwest Airlines
, had purchased Midwest and will turn the airline into a privately funded company.
On August 14, 2007, it was announced that AirTran had renewed their bid for Midwest at a price slightly above that of the TPG Capital offer, in theory at the request of Midwest shareholders. Pequot Capital Management
, which owns 8.8% of Midwest, had been unhappy with the TPG Capital offer, as they felt that AirTran's cash and stock offer would result in greater gains because they felt AirTran's stock would rise in value once the acquisition of Midwest was completed. An executive at another unnamed investment group also expressed similar misgivings about the TPG Capital offer. TPG Capital's offer had been $16/share in cash, where AirTran's latest offer is $10 cash plus 0.6056 share of AirTran stock for each share of Midwest, which at the close of trading on August 13 made the value of AirTran's new offer approximately $16.25/share in cash and stock.
However, Midwest announced TPG would increase its offer to $17 per share and a definitive agreement had been reached on August 16, 2007.
announced it would acquire AirTran Holdings, along with its subsidiary AirTran Airways. The companies will operate separately for a period of time until the absorption of the owned and leased aircraft within AirTran's fleet is complete. On May, 2 2011 Airtran Holdings was purchased by Southwest Airlines. As a result AirTran Airways became a fully owned subsidiarity of Southwest Airlines.
Nevada Corporation
A Nevada corporation is a corporation incorporated under Chapter 78 of Nevada Revised Statutes of the U.S. state of Nevada.Nevada, like the state of Delaware , is well known as a corporate haven...
, based in Orlando, Florida
Orlando, Florida
Orlando is a city in the central region of the U.S. state of Florida. It is the county seat of Orange County, and the center of the Greater Orlando metropolitan area. According to the 2010 US Census, the city had a population of 238,300, making Orlando the 79th largest city in the United States...
, United States, that operated as an airline
Airline
An airline provides air transport services for traveling passengers and freight. Airlines lease or own their aircraft with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit...
holding company
Holding company
A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow...
. Its primary asset was AirTran Airways
AirTran Airways
AirTran Airways, a subsidiary of the Dallas, Texas-based Southwest Airlines, is an American low-cost airline headquartered in Orlando, Florida. AirTran operates over 650 daily flights , primarily in the eastern and midwestern United States...
until Southwest Airlines
Southwest Airlines
Southwest Airlines Co. is an American low-cost airline based in Dallas, Texas. Southwest is the largest airline in the United States, based upon domestic passengers carried,...
acquired AirTran on May 2, 2011.
History
After the large amount of negative publicity surrounding the Flight 592 disasterValuJet Flight 592
ValuJet Flight 592 was a scheduled domestic passenger flight between Miami International Airport, Miami, Florida, and William B. Hartsfield Atlanta International Airport, Atlanta, Georgia...
, ValuJet Airlines
ValuJet Airlines
ValuJet Airlines was an American low-cost carrier, headquartered in unincorporated Clayton County, Georgia, that operated regularly scheduled domestic and international flights in the Eastern United States and Canada during the 1990s...
suffered serious financial problems. On July 11, 1997, ValuJet announced it would merge with the much smaller Airways Corporation, the owner of Orlando, Florida
Orlando, Florida
Orlando is a city in the central region of the U.S. state of Florida. It is the county seat of Orange County, and the center of the Greater Orlando metropolitan area. According to the 2010 US Census, the city had a population of 238,300, making Orlando the 79th largest city in the United States...
based AirTran Airways
AirTran Airways
AirTran Airways, a subsidiary of the Dallas, Texas-based Southwest Airlines, is an American low-cost airline headquartered in Orlando, Florida. AirTran operates over 650 daily flights , primarily in the eastern and midwestern United States...
. In November 1997, AirTran announced it would move its headquarters to Orlando from Atlanta; on November 17, 1997, AirWays Corp. and ValuJet completed their merger and the name ValuJet was dropped.
On January 6, 1999, the board of directors of AirTran announced that Joseph Leonard had been elected to the position of Chairman, Chief Executive Officer, and President of the company.
On August 15, 2002, AirTran stock began trading on the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
.
Proposed AirTran Holding acquisition of Midwest Air Group
In December 2006, AirTran Holdings made public that in December 2005 it had approached the Board of Directors of Midwest Air GroupMidwest Air Group
Midwest Air Group, Inc. was an American airline holding company based in Oak Creek, Wisconsin which owned Midwest Airlines. It was ultimately controlled by parent company, TPG Capital Texas Pacific Group. Delta with the merger of Northwest Airlines Inc,...
-- owner of Midwest Airlines
Midwest Airlines
Midwest Airlines was a U.S.-based airline and was also an operating brand of Republic Airways Holdings based in Oak Creek, Wisconsin. operating from Milwaukee's General Mitchell International Airport...
and Skyway Airlines
Skyway Airlines
Skyway Airlines is an American ramp and aircraft ground handling services and catering company based in Oak Creek, Wisconsin. Until April 5, 2008, it operated as a regional airline under the business name Midwest Connect, feeding Midwest Airlines's hub at General Mitchell International Airport with...
which operates as Midwest Connect
Midwest Connect
Midwest Connect was the brand name for the regional airline service of Midwest Airlines, rather than a certificated airline carrier. Skyway Airlines was the sole operator of Midwest Connect since its inception in 1989, until SkyWest Airlines began additional Midwest Connect service on April 1, 2007...
-- and had asked the board negotiate a sale of the company. That AirTran offer in 2005 was rebuffed by Midwest's board, which also rebuffed a second offer in late 2006. In December 2006, AirTran disclosed the rejection of both offers in hopes of bringing shareholder pressure on Midwest's board to reconsider, which the board recommended that shareholders reject.
On December 13, 2006, AirTran announced that it had made an offer to acquire Midwest Airlines, another operator of the Boeing 717. The offer has since been rejected by the Midwest board. On January 11, 2007, AirTran sweetened its offer for Midwest to $13.25 a share from $11.25 a share, valued at US$
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
290 million, or a 24% premium over Midwest's trading price at the time, and AirTran took its renewed bid directly to Midwest shareholders, bypassing Midwest's board of directors; with an offer that expires on April 11, 2007. On April 2, 2007 AirTran raised its bid to $15 a share, in what CEO Joe Leonard called AirTran's final bid.
In response to AirTran's overtures, Midwest Air Group has stated publicly that it believes that it can maximize shareholder value as a stand-alone company. Midwest Air Group has said that the latest AirTran proposal rejected by its board of directors significantly undervalued Midwest and did not reflect the long-term opportunity inherent in its strategic growth plan. The company also has reiterated that its strategic business plan will offer superior value to shareholders by capitalizing on current industry conditions while remaining true to Midwest's commitment to customer service excellence.
On January 11, 2007, AirTran Holdings increased its bid for Midwest to $345 million in cash and stock, an 18% increase from their previous offer.
On February 2, 2007, AirTran again raised its bid for Midwest to $389 million in cash and stock ($9 in cash and .5842 shares of AirTran stock totaling $15 a share). CEO Joe Leonard stated that this would be AirTran's final bid.
In May 2007, an independent securities expert William McGinnis, CFA, published an analysis of Board of Director responsibilities related to hostile takeover offers. He utilized the AirTran offers for Midwest Airlines as the basis for this case study which is available here.
AirTran was successful in having its slate of 3 board members elected to the Midwest Air Group's board of directors in the election on June 14, 2007 at the Midwest annual meeting.
On August 12, 2007, it was announced that AirTran had lost the bid for Midwest. A private equity group, headed by TPG Capital and including Northwest Airlines
Northwest Airlines
Northwest Airlines, Inc. was a major United States airline founded in 1926 and absorbed into Delta Air Lines by a merger approved on October 29, 2008, making Delta the largest airline in the world...
, had purchased Midwest and will turn the airline into a privately funded company.
On August 14, 2007, it was announced that AirTran had renewed their bid for Midwest at a price slightly above that of the TPG Capital offer, in theory at the request of Midwest shareholders. Pequot Capital Management
Pequot Capital Management
Pequot Capital Management was a multi-billion dollar hedge fund sponsor founded in 1998 by Arthur J. Samberg that was forcibly terminated by order of the Securities and Exchange Commission in 2010. The firm's investment funds invested in a range of markets through a variety of strategies...
, which owns 8.8% of Midwest, had been unhappy with the TPG Capital offer, as they felt that AirTran's cash and stock offer would result in greater gains because they felt AirTran's stock would rise in value once the acquisition of Midwest was completed. An executive at another unnamed investment group also expressed similar misgivings about the TPG Capital offer. TPG Capital's offer had been $16/share in cash, where AirTran's latest offer is $10 cash plus 0.6056 share of AirTran stock for each share of Midwest, which at the close of trading on August 13 made the value of AirTran's new offer approximately $16.25/share in cash and stock.
However, Midwest announced TPG would increase its offer to $17 per share and a definitive agreement had been reached on August 16, 2007.
Acquisition by Southwest Airlines
On September 27, 2010 Southwest AirlinesSouthwest Airlines
Southwest Airlines Co. is an American low-cost airline based in Dallas, Texas. Southwest is the largest airline in the United States, based upon domestic passengers carried,...
announced it would acquire AirTran Holdings, along with its subsidiary AirTran Airways. The companies will operate separately for a period of time until the absorption of the owned and leased aircraft within AirTran's fleet is complete. On May, 2 2011 Airtran Holdings was purchased by Southwest Airlines. As a result AirTran Airways became a fully owned subsidiarity of Southwest Airlines.
Former Subsidiaries
- AirTran AirwaysAirTran AirwaysAirTran Airways, a subsidiary of the Dallas, Texas-based Southwest Airlines, is an American low-cost airline headquartered in Orlando, Florida. AirTran operates over 650 daily flights , primarily in the eastern and midwestern United States...
- Galena Corp - The servicing/support company of the Airline that was created on March 24, 1999.
- Galena Acquisition Corp - set up to acquire Midwest Air Group