Aeroflot says 'nyet' to Alitalia

photo courtesy albspotter

Russian carrier Aeroflot has withdrawn from the bidding process for Italian airline Alitalia, ending months of speculation of a possible takeover. In a press release, Aeroflot said, "Aeroflot believes that acquiring Alitalia under the current conditions would not be the right decision for it to take."

According to the airline, two reasons that led to the decision were the fact that Aeroflot did not get access to "critical information" regarding the "commercial and operational aspects of Alitalia’s business to confidently formulate a well supported business proposal to successfully restructure Alitalia". Another reason: "The conditions and requirements outlined for the privatization process would significantly limit the ability of Aeroflot to implement what Aeroflot believes to be the necessary measures to re-launch Alitalia."

This leaves Lufthansa-backed Italian carrier Air One as the only airline left in the bidding as of now.

Midwest still resists AirTran

AirTran Airways, which has been pushing a hostile takeover of Midwest Airlines, has extended its offer until June 8. AirTran announced the takeover bid back in December, and is seeking to buy Midwest for $389 million in cash and stock. Midwest has staunchly refused to give in; a company spokeswoman said that "It doesn't change anything. The board continues to remain steadfast in its view that the offer is inadequate." The board last month unanimously rejected a $15 per share offer.

But that might not be enough. AirTran announced that Midwest shareholders have tendered almost 14 million shares of Midwest to an AirTran company. That's more than the 56.6% of Midwest's outstanding shares. And even though the company spokeswoman said that the board is still rejecting the idea of a takeover, AirTran now has enough shares to nominate three members to Midwest's board, which has nine members.

Midwest has been seeking to 'go it alone' and has its own plan for independent growth, which involves new routes and more airplanes. It has even launched a website, Savethecookie.com, which plays off of the airline's reputation for serving freshly-baked cookies in flight. Of course, the companies are vastly different in terms of company culture (and, some would argue, in terms of service levels). If the airlines were to merge, I don't think it would be the smoothest of mergers. We'll see if Midwest is successful at convincing the public to stay independent, and if AirTran is successful at convincing the shareholders to go ahead with the takeover.

Aer Lingus Says 'No' To A Ryanair Takeover

Irish 'flag carrier' (this term his been disputed) Aer Lingus has recieved, and promptly rejected, a $1.9 billion (£1 billion) takeover offer from low-cost archrival Ryanair. The reason? The bid "significantly undervalues the group's businesses and attractive long term growth potential", according to the Aer Lingus board. Of course, the real reason could be that Aer Lingus, which has a rich history as a full-service, international airline, doesn't want to be bought out by Ryanair, which has gone from being a dowdy puddlejumper of an airline to one of Europe's largest in a little over ten years.

Michael O'Leary, Ryanair's outspoken boss, called the potential takeover a 'strong opportunity' to create a new airline that would carry over 50 million passengers a year. The airlines would, however, be operated seperately, and in some cases even compete on some routes.

The Irish government could also be an obstacle to any future plans that Ryanair may have regarding an Aer Lingus takeover. It owns 28.3% of Aer Lingus, and although Ryanair has said it would be 'happy' if the government kept its shares, I'm not sure whether the government would be happy to see itself holding 28.3% of an airline that has frequently clashed with governments in other countries.

The deal might also have had some problems with the anti-trust groups: a combined Aer Lingus-Ryanair coalition would carry a huge 78% of passengers between London and Dublin.

The two airlines, though, aren't as different as some think. Aer Lingus used to be a mostly full-service airline, yet in the past five years it has significantly changed its business model, cutting back on some services and opening new routes to mainland Europe (before, it flew primarily to England and the US). Now, Aer Lingus tries to market itself as a low-fare airline, much like Ryanair.

Could a takeover still happen? If it did, Ryanair would have to significantly boost its purchasing price. (It already owns 16% of Aer Lingus.) And the combined group would have to drop some routes and/or frequencies to avoid trouble with anti-trust agencies.