Midwest Air Group Announces Next Phase of Strategic Plan: Brings Choice to Customers


Signature and Saver Seating To Be Available on All Midwest Airlines Aircraft

in 2008; Move Expected to Significantly Boost Revenue and Reduce Unit Costs

MILWAUKEE, May 29 /PRNewswire-FirstCall/ — Midwest Air Group, Inc. (AMEX: MEH), parent company of Midwest Airlines, today announced the next phase of the company’s strategic plan, which will offer customers the choice of Signature and Saver seating on all flights. The dual-seating option, representing an innovative approach for configuring single-class aircraft for domestic travel, will be available this fall on flights on the airline’s MD-80 aircraft and in mid-2008 on its Boeing 717 fleet.

Signature Service — currently offered on Boeing 717 flights — features competitively priced fares and two-across, wide leather seats with exceptional legroom. Saver Service — now available on longer-distance MD-80 flights to mostly leisure destinations — features low fares and two-by-three seating with generous legroom.

“Today’s announcement builds on Midwest’s long legacy of differentiation to better serve customers,” explained Timothy E. Hoeksema, chairman and chief executive officer. “By providing seating options, we are providing customers the opportunity to make personal choices based on seating preference and cost, while still enjoying the same award-winning service they have come to expect from Midwest Airlines.”

Key features of the new seating option on Midwest’s longer-distance, leisure-oriented MD-80 aircraft will include:

  • 12 wide Signature seats, arranged in three rows of two-by-two, offering exceptional legroom;
  • 132 Saver seats offering generous legroom, among the roomiest coach seats in the industry;
  • All seats covered in Midwest’s trademark brown leather;
  • Signature seats available for an incremental fee;
  • The same onboard amenities and “The best care in the air” service provided to all passengers.

Key features of the new seating option on Midwest’s Boeing 717 aircraft will include:

  • 40 wide Signature seats, arranged in 10 rows of two-by-two, offering a 36″ pitch and providing 2-3 more inches of legroom than current Signature seating;
  • 59 Saver seats offering generous legroom, among the roomiest coach seats in the industry;
  • All seats covered in Midwest’s trademark brown leather;
  • More lower-fare seats to popular business markets with strong leisure demand
  • Signature seating automatically provided to passengers traveling on select unrestricted fares. Other passengers will be able to take advantage of Signature seating for an incremental fee;
  • The same onboard amenities and “The best care in the air” service provided to all passengers.

“This is part of the continuing evolution of Midwest’s business model to meet changing market conditions,” Hoeksema pointed out. “We routinely review all aspects of our product, including seating configuration, in conjunction with our strategic planning process. The dual-seating initiative was seriously considered in 2003, extensively analyzed by Midwest and consultants starting in 2005, and adopted as a critical element of our strategic plan in mid-2006.” He added that timing of the implementation is being driven by enhancements in industry distribution technology, which are now in development.

According to Hoeksema, the dual-seating option is expected to enhance long-term shareholder value by increasing revenue while reducing unit costs.

In current Saver markets, the company expects to generate additional revenue from the sale of higher-value Signature seats. In current Signature markets, added revenue generation is expected to result from capturing market share currently lost due to lack of capacity in high load factor markets or those that are slot-constrained, like Washington, D.C. Reagan National and New York La Guardia. The added capacity will also provide the seating needed to accommodate passengers connecting from other Midwest Airlines flights, Midwest Connect flights and the new codeshare partnership with Northwest Airlines, as well as additional demand stimulated by the added low-fare Saver seating. Overall, the implementation of seating choices is projected to generate $30-35 million in annualized revenue.

The addition of 11 seats on each of the airline’s 25 Boeing 717 aircraft will also reduce the airline’s unit costs by increasing capacity 12.5%. “This is an extremely cost-efficient way to add capacity, because it involves only a modest upfront capital investment and limited incremental operating costs,” explained Hoeksema. Had the new seating configuration on the Boeing 717s been in effect in 2006, Midwest Airlines’ cost per available seat mile excluding fuel of 7.22 cents would have been 6.77 cents, a 6.3% improvement.*

“We are making these changes in response to a growing desire by customers to have more flexibility selecting the service attributes they desire,” added Scott R. Dickson, senior vice president and chief marketing officer. “Our customers have told us how much they appreciate Signature seating when they fly for business, but that they would like greater availability of lower-priced seats when flying for leisure. Now they will have a choice.”

For details regarding the new seating choices, visit http://www.midwestairlines.com/choice.

Midwest Airlines features jet service throughout the United States, including Milwaukee’s most daily nonstop flights and best schedule to major destinations. Catering to business travelers and discerning leisure travelers, the airline earned its reputation as “The best care in the air” by providing passengers with impeccable service and onboard amenities at competitive fares. Both Skyway Airlines, Inc. — a wholly owned subsidiary of Midwest Airlines — and SkyWest Airlines, Inc. operate as Midwest Connect and offer service to and connections through Midwest Airlines’ hubs. Together, the airlines offer service to 51 cities. More information is available at http://www.midwestairlines.com.

* See appendix to Strategic Plan Update, May 2007 filed with the Securities and Exchange Commission on May 29, 2007.

This news release contains forward-looking statements about the results expected under the company’s strategic plan and that otherwise may state the company’s or management’s intentions, hopes, beliefs, expectations or predictions for the future. Words such as “projecting,” “expect,” “anticipate,” “believe,” “estimate,” “goal,” “plan,” “objective” or similar words are intended to identify forward-looking statements. It is important to note that the company’s actual results could differ materially from the projected results contained in these forward-looking statements. Factors that may cause such a difference to occur include, but are not limited to, fees and expenses incurred in connection with AirTran’s unsolicited exchange offer, customer acceptance of the company’s strategic plan, the company’s ability to successfully implement the strategic plan, and the risk factors described in “Item 1A. Risk Factors” in the company’s “Annual Report on Form 10-K” for the year ended December 31, 2006.

Important Additional Information

Midwest has filed a definitive proxy statement on Schedule 14A (the “2007 Proxy Statement”) with the Securities and Exchange Commission (“SEC”) in connection with its Board of Directors’ solicitation of proxies to vote in favor of the slate of directors nominated by the Board of Directors and to vote on any other matters that properly come before the 2007 Annual Meeting of Shareholders, or any adjournment or postponement thereof. On May 16, 2007, Midwest began the process of mailing the 2007 Proxy Statement and a WHITE proxy card to each Midwest shareholder entitled to vote at the Annual Meeting. Midwest has engaged MacKenzie Partners, Inc. (“MacKenzie”) to assist it in soliciting proxies from its shareholders. Midwest has agreed to pay customary compensation to MacKenzie for such services and to indemnify MacKenzie and certain related persons against certain liabilities relating to or arising out of the engagement. Directors, officers and employees of Midwest may solicit proxies, although no additional compensation will be paid to directors, officers or employees for such services.

Midwest has filed with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (the “Schedule 14D-9”) and amendments thereto regarding AirTran’s exchange offer that contain information regarding members of the Board of Directors’ and members of management’s potential interests in the exchange offer. Information regarding securities ownership by the Board of Directors and certain members of management as of March 26, 2007 is contained in the 2007 Proxy Statement. Midwest shareholders should read the Schedule 14D-9 and the 2007 Proxy Statement (including any amendments or supplements to such documents) because these documents contain (or will contain) important information. The 2007 Proxy Statement, the Schedule 14D-9 and other public filings made by Midwest with the SEC are available without charge from the SEC’s Web site at http://sec.gov and from Midwest at http://midwestairlines.com.

SOURCE Midwest Air Group, Inc.