Jim McGuigan is a smart guy and is usually right about a lot of things, and I often find myself nodding in agreement with his opinions. But the other day he asserted that the proposed AirTran buyout of Milwaukee-based Midwest Airlines would be "not bad for Milwaukee." I have to disagree. After expressing concern over Midwest's stock price, Jim writes,
The problems with [Midwest] aren’t just that the CEO, Tim Hoeksema and their other honcho, Carol Skornicka haven’t performed for the company--the problems are that they are focused on things other than their core business. Skornicka, a former Republican Governor Tommy Thompson appointee has dragged the company into politics, joining with Republicans to bash Democrats when the Republicans were in power of both the Governors mansion as well as the State Senate. CEO Tim Hoeksema has done his part too and a quick search of campaign finance reports shows that he’s been a big contributor to Republicans.I can't dispute any of these things, but it's worth asking whether AirTran offers a better deal or not. That Midwest followed every other airline in the business to stop offering meals is disappointing, sure, but you won't get free meals on AirTran, either. And while not every Midwest flight has those wide leather seats, none of AirTran's flights do. The Midwest Connect flights are being upgraded to bigger, more comfortable planes of late, too--even they come with cookies now. And AirTran has its own history of labor disputes, particularly back when it formed from the remains of ValuJet--remember them? Couldn't be bothered with basic safety precautions so they had to change their name? Yeah, that's AirTran.
Midwest has lined up for years asking for handouts from Wisconsin also. Are we to now believe that this has been a good thing? We have used out tax money to help Midwest. [. . .]
Let’s take a quick look at what Midwest has done though in the past few years. Carol Skornicka pushed the failed “Blue Shirt” public art project only to have it implode in a public relations frenzy. Skornicka silently faded into the limelight and no one even knew she was part of the committee that suggested it. During a massive layoff masterminded by Skornicka and Hoeksema, they chose as their first department to axe, the quality improvement department. They then axed many other experienced employees and greatly reduced the amount of planes they fly that had their wide leather seats which made them a passenger favorite. They eliminated meal service, instead opting for a pay-per-meal option and kept only one of things that made them popular--the in-flight chocolate chip cookies. They [have] also had major labor disputes.
Jim's a partisan, and so am I. And while there's no question that those at the top of Midwest have given to Wisconsin Republicans (though Skornicka liked Kathleen Falk), AirTran is no better in that regard. And I'm not sure what Jim's thinking is behind his tax statements. Yes, Midwest has gotten tax breaks. But do you think AirTran, which would view Milwaukee as a critical hub, wouldn't also seek a break or two?
Stock price isn't everything, Jim (though the graph on the left--of AirTran's stock in the last two months--might be convincing). There is a real, if intangible, value in having a hometown company. Milwaukee would be a hub to AirTran, not its home. All the generosity of Midwest's charitable and civic activities would be lost. And while a few more flights and a handful more jobs may sound like a good offer, there isn't anything AirTran can do--not even their vow to keep serving those cookies--that can replace having Midwest at home in Milwaukee.