DOW JONES NEWSWIRES
Republic Airways Holdings Inc. (RJET) agreed to acquire fellow
regional carrier Midwest Airlines from TPG Capital for $31 million,
just 17 months after the private-equity giant paid $452
million.
Since then, the airline industry has suffered from record-high
fuel prices and now the ongoing slump in ticket demand.
The deal marks the second big transaction of the day for
Republic, which said earlier Tuesday that it will pay $108.8
million to help connection partner Frontier Airlines Inc. (FRNTQ)
emerge from bankruptcy protection.
Republic shares were recently up 47% at $6.
Private equity firm TPG took over Midwest in January 2008. The
airline flirted with bankruptcy last year amid rising fuel prices,
resulting in the company's slashing its work force by 40%. TPG will
get $6 million in cash, a $25 million note and the ability to
appoint someone to Republic's current 6-person board.
"This acquisition will enhance the strategic positioning of
Republic Airways," said Chairman and Chief Executive Bryan Bedford.
"Midwest has built a strong brand, a loyal base of customers and
dedicated team of employees."
Republic, which will keep the Midwest brand separate, plans to
expand the airline's ability to offer nonstop service with new
aircraft, scrapping its Boeing 717s with Embraer 190s.
The five-year note is convertible into Republic common stock at
$10 a share, which would result in 2.5 million new shares. Republic
currently has about 35 million shares outstanding.
Midwest Airlines grew out of Kimberly-Clark Corp.'s (KMB)
internal transportation service for executives. The
consumer-products company formed K-C Aviation in 1969, providing
aviation services to other companies and specializing in the
meticulous customization of corporate aircraft.
In 1984, K-C Aviation and Kimberly-Clark launched Midwest
Express Airlines, which became publicly traded in 1995 and
shortened its name to Midwest Airlines in 2003.
-By Jay Miller, Dow Jones Newswires; 201-938-2331;
jay.miller@dowjones.com