about airtran
February 1, 2007
Dear Midwest Shareholder:
On January 25, 2007, Midwest’s management recommended that you reject AirTran’s offer to combine Midwest and AirTran to form a stronger, more competitive airline, ignoring the significant premium and long term value that our exchange offer of $13.25 in cash and AirTran stock would provide to you. Yet again Midwest rebuffed our offer without meeting with us to carefully review the merits of the proposed combination.
Midwest’s management has taken its stance despite the compelling evidence that, by any measure – financial, network revenue and diversity, opportunities for employees, fleet plan, cost structure, growth for the greater Milwaukee region, and most significantly, the shareholder value creation model we have put forth – the merits of combining AirTran and Midwest are superior to Midwest’s “stay-the-course, go-it-alone” plan. Midwest’s management is also taking its unilateral stance despite the many uncertainties it faces in Midwest’s future competitive environment and the threat that other airlines will quickly move in and push Midwest out of its position in Milwaukee.
Instead, the Midwest Board is apparently content to trust the value of your investment to an uncertain plan put forth by Midwest’s management that envisions a scenario whereby it believes that as a stand alone company, and assuming no further competition into the markets it presently serves and stable fuel prices, it can achieve earnings per share growth in 2007 that is nearly twice as great as the earnings growth estimated by Wall Street analysts. Midwest’s management offered no substantive basis for what can only be described as an extremely optimistic projection, only the hope that “market conditions in the industry will continue to improve and increasingly favor high quality carriers like Midwest.” We believe this hope will not be a successful strategy for you, the Midwest shareholders.
WHOSE INTERESTS IS YOUR BOARD REALLY SERVING?
We believe that Midwest management’s refusal to fully contemplate the compelling benefits of combining with AirTran raises serious corporate governance and transparency questions. We urge you to consider:
- Why is Midwest’s management trying to prevent AirTran from communicating directly with you about our plan, and by refusing to allow us to do that, has forced us to go to court in order to make Midwest’s management comply with law? We believe that if Midwest’s management is so confident about it’s “stay-the-course, go-it-alone plan,” it should provide a level playing field for its shareholder to fairly consider AirTran’s proposal.
- Why is the Midwest management team trying to mislead its employees and the Milwaukee community by claiming that the AirTran plans will create job losses? AirTran has laid out in detail how its plan will create many more jobs in the Milwaukee region than Midwest now provides.
- Why should you trust Midwest’s management’s “stay-the-course” plan given the abysmal financial performance of Midwest in the past? Are you content with merely a very small profit in one year out of the past five--and a huge net loss for the past five years (in excess of $126 million, based on Midwest’s SEC filings and 2006 earnings releases)? The management team that brought you these results is now asking you to believe that they can achieve a dramatically better result in the future on a “go-it-alone” basis than could be achieved in a combination with AirTran.
- Why is Midwest’s management lining up Wisconsin politicians to lobby regulators to find some fault with our plan? Clearly, we believe, the competitive environment for Midwest is likely to worsen, especially if, as some observers have noted, Northwest Airlines emerges from its Chapter 11 proceeding and re-enters the markets currently served by Midwest, thereby putting new pressures upon Midwest. By contrast, our plan envisions creating a stronger, more diversified airline, better able to withstand competition, offering greater job security to employees and more service to Milwaukee and the other cities currently served by Midwest.
- How credible is Midwest management’s plan, considering the many uncertainties it has vis-à-vis the future competitive environment and its track record of missing its own growth targets? Indeed, Midwest’s 2007 projected earnings per share are nearly double the estimates of those of Wall Street analysts. We believe investors should be skeptical of Midwest’s plan given management’s record over the past few years of consistently falling short of its own projections.
- Isn’t it troubling that the same Board that thinks you should not benefit from the significant premium and long term value provided by AirTran’s offer failed to disclose to you that in December, it voted to increase each director’s annual retainer fee by 60 percent and to increase by 100 percent the fee each director will be receiving for attending meetings (and provide a $500 fee for every telephonic meeting directors attend)?
- Similarly, why did Midwest’s management also fail to tell you, until required to do so by SEC disclosure regulations, that it paid $100,000 for, and based its recommendation to you upon, the advice of an “independent” aviation consulting firm whose chairman has been a Midwest director for over 20 years? That consulting firm was requested to provide its advice to the very same Board committee that is headed by the consulting firm’s own chairman.
HIGHLY QUALIFIED AIRTRAN NOMINEES
TO REPRESENT SHAREHOLDERS’ INTERESTS IN THE BOARDROOM
We at AirTran do not believe Midwest’s management is serving the best interests of you, Midwest’s shareholders, in recommending against AirTran’s offer. AirTran, therefore, has announced that we will be nominating three individuals for election to the Board of Directors of Midwest at the next annual meeting of stockholders. We believe our three nominees Jeff Erickson, Charles Kalmbach and John Albertine will help restore high standards and strong corporate governance at your company. The election of AirTran’s nominees to Midwest’s Board will ensure that shareholders’ best interests are being met. (For your convenience, a brief resume of each of these candidates follows.) While this slate of director candidates, if elected, will not constitute a majority of the members of the Board, we believe it is vital that your interests be represented inside of the Boardroom.
You will be able to send a message to your Board and management with your vote at the upcoming Annual Meeting. However, it is important that you also send a message TODAY to the current Board and management by tendering your shares pursuant to the AirTran Exchange Offer. In order to be certain that you have all the information you need and in light of Midwest’s refusal to allow us to communicate directly with you, we have decided to extend the expiration of our exchange offer until March 8, 2007. You should also know that AirTran has brought legal action to win the right to speak to you directly, and will continue to fight in Court to enable us to do so.
At the end of the day, you, as the shareholders, are the owners of the company and you will ultimately determine the future of your investment. We are confident that you will give our offer a full and fair hearing, and that once you do so, you will recognize it as a tremendous opportunity to build a stronger, more competitive airline that will serve the best interests of shareholders, employees and the communities we all serve.
Thank you for your consideration.
Sincerely,
Joe Leonard
Chairman and
Chief Executive Officer