Midwest’s found money: adequate AirTran defence?

They say honesty is the best policy, and you have to admire the Midwest Airlines employee who stumbled on a bag of gems near the Kansas City airport, a haul worth about a cool quarter million dollars. Midwest ramp agent Robert Lewis says he thought for a second about keeping it, since it was lying out at a road intersection near the employee parking lot. Lewis may be getting a reward from the jeweller whose name was on the bag holding the gems,grabbag.jpg
but one wonders if they are all that happy at Midwest headquarters up in Milwaukee.

After all, Midwest needs every penny it can get. Just the other day, the airline said its earnings would be down for the rest of the year, and that it couldn’t say how far down. That’s hardly a good thing to have to say when you’re trying to fend off a hostile take-over. Midwest has been battling off a siege by AirTran Airways for months now, and the castle is hardly safe.At Midwest’s annual general meeting of shareholders, dissidents elected three new members to the Midwest board of directors, candidates who were nominated by AirTran as part of its strategy to force Midwest management to negotiate. The Orlando-based AirTran has also offered a mix of cash and its own stock in a $365-million bid. Although a majority of Midwest shareholders have voted to accept the offer, and even though four shareholder-advisory services have recommended the AirTran offer, Midwest has a curious ‘poison pill’ defence provision in its corporate by-laws, and this could still legally fend off AirTran

But the election of AirTran’s allies, who include former TWA and Atlas Air Cargo chief executive Jeff Erickson, is a significant step. Midwest chief executive Tim Hoeksema said after vote, “while we are disappointed by today’s results, we recognise that out shareholders have spoken. If today’s election says anything at all, it says that our shareholders want us to listen and that is what we intend to do”. Hoeksema said the nine-member board would let AirTran make a formal presentation, which a big step toward negotiating. With three members of his board ready to open the castle door, Hoeksema may have no choice but to open the gates, lower the drawbridge, and say, “Howdy, y’all” to the folks from Florida.

Milwaukee media report that the meeting was a feisty one, since Midwest, a high-service carrier noted for its leather seats and fresh cookies, tends to attract very loyal supporters. One Midwest shareholder reportedly stood up and recited a poem he had written (“Ode on a Leather Seat” or “Paean to a Chocolate Chip Cookie”?) in support of Midwest; another was quoted as standing up and saying “there’s more to a company than profits.” Wonder what he had in mind. Maybe it was those cookies. As for Mr. Lewis, Helzberg Jewellers, the shipper of the diamonds, gave him a $10,000 reward and made a $5,000 donation to cause of his choice. That is a good return for the jewellers’ lost $265,000 bag and a nice gesture. No word if Mr. Lewis plans to buys stock in either airline with his new-found funds.

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