Republic CEO Says Acquisition Represents ‘A New Day for Midwest,’ With New Fleet and New Market
Milwaukee, Wisconsin, June 23, 2009 – Republic Airways Holdings (NASDAQ/NM: RJET),
announced today it is acquiring Milwaukee-based Midwest Airlines from
TPG Capital, a Ft. Worth, Texas-based private equity firm. The
transaction is subject to customary regulatory approvals and is
expected to close in four to six weeks.
“Since we began our
codeshare partnership with Midwest, we have been impressed by the power
of its brand,” said Bryan Bedford, chairman, president and chief
executive officer of Republic Airways. “This is really a new day for
Midwest Airlines. We are acquiring the airline to secure its future,
renew its brand promise and help it grow.”
Bedford made the announcement today at Midwest Airlines headquarters in Milwaukee.
Bedford
said that Midwest will become a wholly owned subsidiary of Republic
Airways Holdings and will continue to operate as a branded carrier with
its longstanding, award-winning commitment to outstanding customer
service. He added, “This acquisition fits well with the overall
strategic plan of Republic Airways by continuing to diversify and
expand our sources of revenue.”
Rick Schifter, a partner with
TPG Capital, said the transaction secures a more certain future for
Midwest, preserving its legacy as Milwaukee’s hometown airline with its
distinct brand of customer service. “At the time we acquired Midwest,
we envisioned that it would ultimately become part of a larger airline
and network, as the ability to operate as a small, independent carrier
is increasingly challenging in this economic environment,” Schifter
said. “This outcome is a successful one for Midwest, its customers and
the communities it serves. It would not have been possible without the
support of Midwest chairman Tim Hoeksema, whose leadership,
selflessness and perseverance enabled us to secure this transaction
with Republic.”
Schifter also said TPG will retain a strategic
stake in Republic. “In Republic, we see an airline with the
capabilities to capitalize on current trends in the airline industry.
It is an appropriately sized alternative in the industry which can
serve as either an affiliate of legacy carriers or a branded airline,
depending on the market.”
As part of the announcement, Republic
announced it will be transitioning Midwest to a single fleet type,
replacing its nine Boeing 717 aircraft with Embraer 190 aircraft.
Republic already operates 12 76-seat Embraer 170s for Midwest and
recently announced an agreement to operate twelve 37- to 50-seat
Embraer regional jets for Midwest, replacing the 12 50-seat Canadair
regional jets operated for Midwest by SkyWest Airlines. Bedford pointed
out that operating Embraers as a single fleet type provides for a more
fuel-efficient, flexible and cost-effective fleet solution for Midwest
markets.
Bedford added that he expects Midwest customers to be
particularly impressed by the onboard comfort offered by the Embraer
E190s. “Passengers will have an extraordinary amount of personal space
– including the roomiest seats and widest aisles in the category, as
well as a 6’7”-high cabin and extra overhead bin storage. Best of all,
with the transition to the single fleet type, Midwest will be the only
U.S. carrier to offer coast-to-coast service with two-across seating
and no middle seats throughout its fleet,” he said.
“We
recognize that increased competitive activity in Milwaukee will require
us to stay close to customers and cost-effectively provide what they
want in terms of service quality to a variety of markets,” Bedford
said. “We will be exploring options to restore and enhance service to
various cities as a critical piece of Midwest’s historic, strong brand
promise, which was strained by the effects of record fuel costs in 2008
and the deep economic downturn in 2009.”
Midwest also announced
that it had reached out-of-court settlements with its principal
unsecured creditors, and recently disclosed that it had obtained $12
million in debt financing from TPG and Republic – completing the
necessary milestones to enable this acquisition.
Bedford added
that under new ownership, discussions regarding the renegotiation of
collective bargaining agreements would continue with labor
organizations representing Midwest pilots, currently in mediation, and
Midwest flight attendants. Ultimately, details of the integration
process for represented employees will be determined by their
respective unions.
“This year marks our 25th year of service.
This announcement enables Midwest to write the next chapter in our
history, building on our unique heritage of service and community
commitment,” said Timothy E. Hoeksema, chairman of Midwest Airlines.
“Republic is a quality organization that appreciates the bond Midwest
has with its customers and communities. Republic can bring operational
and cost efficiencies to Midwest that we as a stand-alone carrier could
not leverage.”
Due to the overlapping responsibilities of the
senior leadership teams of Midwest and Republic, a number of
senior-level executives will be leaving the organization, including
Hoeksema. Bedford will serve as chief executive officer of Midwest
following the close of the transaction.
“As Midwest celebrates
its 25th anniversary, I want to make sure I recognize what the
employees of Midwest – past and present – have built and sustained
through both good and difficult times,” Bedford said. “This is a great
brand built on superior customer service and dedicated employees that
will continue under new ownership.”
About MidwestMidwest
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.
About RepublicRepublic
Airways Holdings, based in Indianapolis, Indiana, is an airline holding
company that owns Chautauqua Airlines, Republic Airlines and Shuttle
America. The airlines offer scheduled passenger service on
approximately 1,200 flights daily to 105 cities in 36 states, Canada,
Mexico and Jamaica through airline services agreements with seven U.S.
airlines. All of the airlines’ flights are operated under their airline
partner brand, such as AmericanConnection, Continental Express, Delta
Connection, United Express, Midwest Connect, Mokulele Airlines and US
Airways Express. The airlines currently employ approximately 4,500
aviation professionals and operate 215 jets.
About TPGTPG
Capital is the global buyout group of TPG, a leading private investment
firm founded in 1992 with approximately $45 billion of assets under
management and offices in San Francisco, London, Hong Kong, New York,
Fort Worth, Menlo Park, Washington, D.C., Melbourne, Moscow, Mumbai,
Paris, Luxembourg, Beijing, Shanghai, Singapore and Tokyo. TPG Capital
has extensive experience with global public and private investments
executed through leveraged buyouts, recapitalizations, spinouts, joint
ventures and restructurings. Please visit
tpg.com.