Former TAM A320 seen in blue. Two former Avianca birds, an MD-83 and a Fokker F100. Photo by JL Johnson
This is the first in a series of posts I have planned with a focus on the Midwestâ€™s impact on aviation. Dismissed as flyover country by some, much of aviationâ€™s history occurred right here in the middle of the US. Itâ€™s not just the past we will be exploring- the Midwest is very much involved in aviation today, and is well positioned to support the evolution of aviation in the future. Join me as we explore the facets of aviation, right here from the heart of America.
What is Jet Midwest? They are a full service MRO (maintenance repair overhaul) firm that is also involved in the purchasing, painting, leasing and recycling of planes.
When Jet Midwest buys planes they are overhauled, leased and/or sold, or parted out.Â Itâ€™s a sad day when a flying machine meets its demise.Â However, at Jet Midwest, through the sacrifice of one plane, dozens or hundreds more across the globe are able to stay in service. Â Their motto for what they do: â€œParts to Planes.â€
I was recently invited out to tour their huge facility on the southeast corner of the Kansas City International Airport property. The 2.4 million square foot facility, formerly of American Airlines and before that TWA, has hangars that can store multiple 747s, with many more narrow bodies between.
Northwest Airlines Boeing 757
There has been a lot in the news about airline mergers and buy outs. Delta & Northwest, United & Continental and most recently AirTran & Southwest. Some in the media throw around “merger” and “takeover” interchangeably, but they are very different. When two airlines come together, there are two types of sale agreements: the merger and the takeover.
I got an email from a reader (thanks Jay) asking about the difference between an airline merger and take over. I am not a financial professional, but I want to try my best to point out the major differences. If you have any more to add, please feel free to leave a comment!
This is when two companies come together blending their assets, staff, facilities, and so on. After a merger, the original companies cease to exist, and a new company arises instead. Sometimes the new entity will take the name and brand from one of the airlines, but sometimes an entirely new brand can be created.
Delta and Northwest merged, leaving the Delta brand. United and Continental merged, which will leave the United brand. In mergers like these, management needs to work hard to come to certain agreements, figure what/who will be cut and how the new airline will operate. Of course, this can be a very complex process for both airlines to undertake.
TAKE OVER / BUY OUT / ACQUISITIONS
In a takeover, a company is purchased by another company. The purchasing company owns all of the target company’s assets including company aircraft, trademarks, routes and so forth. The original company may be entirely swallowed up, or may operate semi-independently under the umbrella of the acquiring company.
In the case of Southwest buying out AirTran, the AirTran brand will disappear and be absorbed by Southwest. It is not a merger and Southwest will own the assets of AirTran and have complete control. This process is easier than a merger, since management at Southwest has the final say, but they need to successfully share their culture with the employees at AirTran and make sure they feel welcome.
Alright, I hope that helps some!
AirTran Boeing 717 taking off while Midwest sits in the background
Dan Webb over at Things in the Sky take a look at AirTran and Frontier deciding to end their mutual relationship. Yesterday Webb looked at AirTran announcing they would give you 32 A+ credits (that will get you two round trip tickets) if you donated 50,000 Midwest miles (also good for two round trip tickets) to charity.
This creates a problem. Last year Republic Airlines bought Midwest and Frontier. Recently they announced they would change the name to “Frontier Airlines.” AirTran and Frontier had an agreement to share customers (not a codeshare however) since 2006. AirTran is playing hardball (I think it is pretty genius) to get Midwest customers, yet were still trying to play nice with Frontier.
Webb guessed this probably couldn’t last for long and he was right. Today he posted that AirTran and Frontier have announced the ending to their partnership. Both airlines are competing in Milwaukee and AirTran is trying to steal customers from Midwest during Frontier’s brand transition just didn’t sit well with Frontier (surprise, surprise right?).
It seems AirTran is making a pretty smart move here. Loyal Midwest customers are now looking where they want to place their loyalties. If you remove your miles from the equation, now you have a new Frontier which will be taking a while to create brand consistency (ie: will your flight have DirecTV? Internet? On an Airbus or Regional Jet?), where AirTran has the consistency of having Wi-Fi and XFM radio on all flights.
Either way, the people of Milwaukee should reap the benefit of two airlines competing for their business. Game on!
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