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Northwest Reaches Deal To Acquire Stake In Airtran

Fri., March 10, 1995, midnight

Northwest Airlines will obtain nearly 30 percent of Airtran Corp.’s stock under a tentative agreement giving the airline effective control of commuter feeder Mesaba Aviation.

As its biggest shareholder, Northwest will get three of eight seats on Airtran’s board while controlling Mesaba’s scheduling and aircraft routing, under the arrangement announced Wednesday by Airtran, Mesaba’s parent.

Airtran, meanwhile, will spin off a recently created low-fare jet subsidiary known as Airtran Airways Inc., a separate company in which Northwest will not have a stake.

The agreement must be approved by federal authorities, Airtran shareholders and both boards.

It would allow Northwest more direct control over operations of Mesaba, which feeds Northwest’s Twin Cities and Detroit hubs.

Airtran Chairman Robert Swenson said the agreement responds to objections raised by Northwest and its pilots union to Airtran’s entry into the jet carrier business in mid-1994.

He declined to elaborate, and called the agreement a “win-win situation” for both Airtran’s shareholders and employees.

“Northwest and Airtran believe it’s a good situation,” Swenson said. “They get better representation on the board, additional ownership, and immediate scheduling and routing control.”


 
Tags: business

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