By Patrick Fitzgerald
WisBusiness.com
AirTran Holdings CEO Joe Leonard, the featured guest at Wednesday’s Milwaukee Press Club Newsmaker Luncheon, said he believes his company is in a unique position to make an imminent buyout of Midwest Airlines.
“We have demonstrated by keeping our costs low that we have a business model that can go against anyone in the industry,” argued Leonard, who said pending on the speed of negotiations, a deal could be reached with Midwest in as little as 72 hours.
Leonard’s comment came at the heels of yesterday’s announcement by Midwest that its board of directors will begin negotiations with AirTran and other interested parties.
Leonard called the announcement “a huge step forward,” but declined to speculate who those other parties could be, saying AirTran’s offer is the only one that can guarantee growth for Milwaukee as a regional transportation hub.
“A number of people would not like us to be successful,” said Leonard. “Southwest would, and JetBlue would because they want to come in and compete in this marketplace.”
“We may be wrong, but we don’t think there’s anybody that can bring what we can bring.”
Leonard went on to detail a plan that AirTran hopes will allay the fears of Milwaukee’s business community that losing its headquarter status will deal a significant blow to the economic potential of the city.
He said the deal will update Midwest’s aging fleet while saving consumers $363 million per year on air travel across the state.
He said the proposed merger would increase daily departures by 74 flights, double daily onboard capacity, and add 29 additional destinations to the Milwaukee hub that would include San Juan, Puerto Rico; Cancun, Montreal, and Houston.
AirTran hopes to have the plan implemented by June 2009, and is remaining committed to its goal of expanding by 10 to 12 percent annually, he said.
Speaking to WisBusiness after the event, Leonard dismissed accusations from skeptics that the buyout would cost Milwaukee jobs and leave a gaping hole in the city’s image.
“The most likely scenario is its going to produce $1 billion per year in economic activity and over 1,000 high paying jobs,” said Leonard. “And I think the most likely outcome is something very positive for the community, certainly more service at lower fares that Milwaukee’s haven’t seen before.
“I think Milwaukee is a very underserved market, and we need to bring that up to national standards which would benefit the community quite a bit,” he said.
When asked by WisBusiness if Midwest chairman Tim Hoeksema would be offered a position on a new board of directors, Leonard answered that “those are details we would work out with the board, I think that’s the appropriate place to do it.”
Despite Leonard’s optimistic projections for AirTran’s impact in Milwaukee, he said the company’s headquarters would remain in Orlando and that AirTran would not keep the Midwest namesake.
However, Leonard said that would not hamper AirTran plans to become active in Milwaukee, complimenting Midwest chairman Tim Hoeksema on building a strong local base.
“I do believe you will find we are immensely involved in the communities we serve,” said Leonard, noting AirTran’s donations to local charities that exceeded competitor Delta Airlines.
“Our involvement far exceeds our size,” he said.
Leonard also affirmed AirTran’s commitment to Midwest’s service standards that made the hometown airline revered within the state, commenting that “a lot of the perception is based on nostalgia.”
“You don’t have numbers like this if you’re having a lousy performance,” said Leonard, noting AirTran’s fourth place finish among low-cost carriers in a 2007 J.D. Power and Associates survey measuring airline operations.
