Cookies, service part of battle for Midwest Air

updated 10:15 a.m. ET Jan. 16, 2007

MILWAUKEE - Known for wide leather seats, freshly baked cookies and attention to detail, regional carrier Midwest Airlines has largely flown under the national radar as it quietly gained a following in its namesake region.

The underdog airline now finds itself under siege — the target of a hostile takeover that many of its loyal passengers and shareholders fear will end the perks and transform the airline from one that boasts, “The Best Care in the Air,” to just another airline.

“On other airlines, most business models are to pack them in,” said Art Suarez, a Milwaukee area resident who is leading a grass-roots effort to fend off the merger. “We feel like objects and Midwest makes us feel like people.”

What started as an airline for executives of consumer products giant Kimberly-Clark almost 40 years ago has grown into a company that serves 48 cities on 345 flights a day.

Besides earning accolades for its service, especially its two-by-two seating, Midwest has attracted the interest of rival low-cost carrier AirTran Airways.

AirTran Holdings Inc. announced in mid-December that Midwest Air Group, parent company to Midwest, rejected its takeover bid worth about $290 million. Milwaukee-based Midwest rejected the offer in early December without making a peep.

AirTran has continued to make its case by taking out full-page advertisements in Midwest’s hometown paper, courting local officials and appealing to passengers and shareholders to urge the board to reconsider. On Thursday, it raised its bid to $345 million in cash and stock. Midwest said its board will evaluate the offer and make a recommendation to shareholders within 10 days.

Extending an olive branch to wary shareholders, AirTran has said it would take a hard look at Midwest and could even learn from it about customer service, said Tad Hutcheson, vice president of marketing for the Orlando-based airline

For example, should the merger go through, AirTran would bake cookies on all its flights, Hutcheson said.

“That’s a distinctive hallmark of Midwest service and we have to keep it,” he said.

Consolidations seem to be the way of the airline industry right now. United and Continental are holding preliminary discussions of a merger and US Airways Group Inc. has made a hostile bid for bankrupt rival Delta Air Lines Inc.

AirTran argues that the merger makes sense and pushed its offer in ads in the Milwaukee Journal-Sentinel. AirTran Airways has its hub in Atlanta, which would complement Midwest’s hub in Milwaukee, AirTran Holdings Inc. Chairman and Chief Executive Joe Leonard has said. Also, the airlines’ respective fleets make heavy use of Boeing 717s, so the merger could be seamless.

Midwest says the attention is flattering, but no thanks. The company also hired Goldman, Sachs & Co. as a financial adviser after the takeover rejection to look at its own business plan and respond to anything that may happen, spokeswoman Carol Skornicka said.

“For our entire history, we’ve had to overcome the skeptics who said we were too small or our business model couldn’t work, and we’ve always emerged as the exception that succeeded,” Midwest CEO Tim Hoeksema wrote in a full-page ad of his own in the paper.

Midwest first started as a service for executives of Kimberly-Clark in 1969 out of Appleton, Wis. Ten years later, Midwest Express was born and the company started serving commercial passengers. A few years later, it moved to Milwaukee, going public in 1995. Today it serves 48 cities, including large ones like Los Angeles and Washington, D.C., and smaller ones like Garden City, Kan., and Flint, Mich.

Midwest developed a following for its service, which most likely resulted from its founding as an executive airline, said Darryl Jenkins, an independent airline consultant in Marshall, Va. People nowadays pay attention when they get perks in the air, since there are so few, he said.

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