Friday, January 18, 2008

Midwest Airlines betrays employees: let them eat cookies!

When Midwest Express was purchased for $450 million by a Texas based private equity firm, TPG Capital, Milwaukee’s political leadership had nothing but praise for the deal.

County Executive Scott Walker said he hoped there would be no major cutbacks while stating, despite overwhelming evidence to the contrary, that when companies are privately owned, managers can take a longer view of things because they do not have to worry about satisfying shareholders each quarter with earnings and dividends.

"I'm hoping it's long-term good news.” Walker said. “But certainly in the short term it is good news."

County Board Chairman, Lee Holloway, praised the deal with equal naiveté: “I truly believe that a private equity group will provide Midwest with the necessary resources to compete in the constantly changing airline industry.” Mayor Tom Barrett was also effusive:” This new arrangement provides an excellent opportunity for Midwest to remain an engine for jobs and economic growth across our area.”

Even the pilots’ union head. Capt. Jay Schnedorf, swallowed the Kool Aid saying that TPG Capital is not looking to cut service or employment. "Their intent is to grow Midwest Airlines," Schnedorf said, arguing that TPG Capital's resources would allow Midwest Air to have more growth opportunities.

Yesterday, Midwest Airlines announced that it was eliminating 400 jobs, a move that Midwest Chairman and CEO, Timothy Hoeksema, defended as a “difficult but necessary cost saving measure.”

When Hoeksema described his decision as painful, he employed classic Orwelian doublespeak that obfuscates rather than clarifies.

The obvious question is painful for who?

The almost 400 employees- mostly pilots, flight attendants, mechanics and dispatchers- and their families who were told that Midwest had been saved from an unfriendly, job threatening takeover by Air Tran? Or should Hoeksema himself be the object of our sympathy for having to make such a tough, but ultimately necessary call?

Don’t shed too many tears for Mr. Hoeksema and the firm’s top brass!

The $10 million plus he receives when the sale is eventually approved will make it much easier to forget any lingering pangs of guilt. Nor for Midwest’s senior vice presidents who are each in line for six- or seven-figure sums. And unlike the 380 Skyway employees who are losing their jobs, Midwest senior executives made sure their jobs were secure in the sale to TPG. Executive job security and payouts, not cost savings, were a major part of this deal.

It appears that the only one who was right about Midwest’s sale was Midwest's unsuccessful suitor, AirTran Chairman and CEO, Joe Leonard who, after the sale, presciently warned: "… the Midwest board has chosen a path that will benefit current senior management by selling out to a private equity firm… private equity investors are laser focused on generating short-term returns and the only way to accomplish that goal is to slash costs by cutting back on service and eliminating jobs…If the Midwest board is successful in selling the company to a private equity investor, the Midwest employees should be concerned about their job security and Midwest's customer service is sure to suffer."

As more of Milwaukee’s hard working, productive workers are kicked to the curb, I wonder if our elected officials, who praised this deal and the TPG and Midwest executives who made it, will learn that corporate executive promises of employee job security are as worthless as a three dollar bill.

4 comments:

Charley said...

The rapn on Air Tran was that they would not follow through on their claims to expand routes and increase employment. Perhaps they would not have, but at least there would have been an effort, as demonstrated by their continued interest until they could no more. With the way the deal went down, the all-too-evident writing on the wall has come clear. The community, with the lost opportunities for tourism that expanded routes might have brought and the lost potential for increased employment, has clearly been played for a sucker. We can now swallow our pride with our cookies (as long as we fly after 10:00AM).

Anonymous said...

Hoeksema played the media and Milwaukee for suckers. Joe Leonard of Air Tran predicted that this would happen, and it has happened even before the phony-baloney Midwest Express buyout is approved.

Milwaukee lost a huge opportunity to be a major hub for a growing airline.

This was a world-class choke job!

Skyway Ramper said...

You need to go back and read the news. I work for Skyway Airlines, which is the company that is taking the cuts, and the main reason was the short sightness of these executives from about 5 years ago. Skyway, or Midwest Connect, flies mainly Do328 JETS, a plan that has not be in production for sometime. This forces to have one in repair and one sitting at as a replacement at all times.This creates huge mantince costs. Skyway was going to replace the aircraft a few years ago, but did not go through with the plan. The actual move was to contract to Skywest airlines to operate the same flights with 50 seat CRJ aircraft, which have much lower operating costs. While these are still jobs lost, Midwest is taking some of the people in to the main airline, and skywest is hiring others

Tim said...

I was on one of the "new" flights operated by Skywest Newark-Milwaukee (formerly operated by Midwest and not Skyways. The flight will probably be my last on Midwest. Their main claim to fame was offering a superior product - more room, better meal choices and great service. None of this occurred on my last flight. They have now managed to turn into every other airline. The "joke" that on their 717's they will now offer passengers greater choice by providing passengers with the first class seating they were used to for an additional $60 per flight segment, or give you a smaller seat for what you have paid in the past for the larger seat, is not something I imagine customers have been asking for. As a result, I will now book on other airlines, whcih will offer more destinations, more frequent flights, and often larger aircraft. I will miss Milwaukee's airport, especially Renaissance Books, but Midwest has lost the loyalty I have given them for the past 8 years. Sad, very sad.