Midwest Airlines Inc.'s name will remain, some of its jets will still have wide seats, and the carrier promises more nonstop routes from Milwaukee under the ownership of Republic Airways Holdings Inc. of Indianapolis.

Announced Tuesday, Republic's purchase of Midwest from TPG Capital, a Texas investment firm, would end 25 years of local control for the largest airline to fly out of Mitchell International Airport. The scope of the changes is underscored by the decision of longtime Midwest Chief Executive Officer Timothy Hoeksema to retire once the sale becomes final in four to six weeks.

Several Midwest passengers at Mitchell International Airport said the news did not surprise them.

"In its heyday, it was quite a treat to fly them," said Dick Tollefsen of Fox Point. "They're more like an ordinary airline now."

Although the vast majority of Midwest's 1,640 employees are expected to keep their jobs, there will be cuts, said Bryan Bedford, Republic CEO and future CEO of Midwest. Those will occur mainly among administrative and back-office employees who are doing work similar to that of their Republic counterparts, he said.

Midwest's 112 union pilots and 120 union flight attendants will likely face pay cuts as they are integrated into Republic's labor contract, which pays lower salaries to its union flight crews.

Bryan Jandorf, spokesman for the Midwest pilots union, said the group was encouraged by Bedford's plans to expand Midwest and looked forward to working with the new management team.

Bedford said Republic wanted to hire Midwest flight crews. Other Midwest employees, including ground employees at Mitchell and other airports, marketing and sales employees, mechanics and customer service representatives, also are needed, he said.

Restoring routes

Republic plans to restore some destinations that Midwest cut last year, when the Oak Creek carrier reduced service 40% after jet fuel prices spiked. That was among the steepest service reductions by a U.S. carrier in 2008. It included the elimination of nonstop service from Milwaukee to around 15 cities, such as Los Angeles, San Diego, Seattle, Baltimore and St. Louis.

Bedford declined to say which routes Republic plans to restore.

"Look at what was Midwest's network 12 months ago, and you get a good gauge of where we're headed," Bedford said.

Midwest's biggest competitive distinction will be its offering of more nonstop flights from Milwaukee than other airlines, including low-fare carriers Southwest Airlines and AirTran Airways, he said.

The largest Republic aircraft is the 94-seat Embraer 190 jet, which Midwest is to begin flying nonstop to Los Angeles on Aug. 1. Bedford said those jets would each include 10 seats that are the wide "signature" seats.

Bedford said the signature seats would be another selling point for Midwest, which has built a reputation for good customer service.

The Embraer jets are to be phased in over nine to 12 months to replace Midwest's nine remaining 99-seat Boeing 717 jets, which each provide 40 signature seats.

Speculation about Republic's buying Midwest had been building among airline industry observers in recent months. Republic's role at Midwest has been growing since last fall, when Republic lent financially troubled Midwest $25 million.

That loan helped Midwest avoid Chapter 11 bankruptcy. It was tied to the first Midwest-Republic contract, with 12 Embraer 170 jets, smaller planes that replaced 16 Boeing 717s. That led to a layoff of 240 Midwest employees.

The announcement Tuesday came just two weeks after Midwest said it was getting additional financing and jet service from Republic, including the Embraer 190s and Embraer regional jets. As part of that transaction, Republic said it was lending Midwest another $6 million.

Under terms of the acquisition, Republic will pay $31 million: $6 million in cash and a $25 million, five-year note convertible to Republic stock.

TPG Capital of Fort Worth, Texas, and Northwest Airlines Corp. paid $452 million for Midwest in January 2008, with TPG taking a 53% stake and Northwest owning 47% of the company.

Republic's purchase of Midwest will "solidify the future of Midwest Airlines," Hoeksema said.

Hoeksema and Bedford said Midwest faced very difficult financial conditions the past 18 months as record-high jet fuel prices ate up revenue and a recession dampened demand for air travel.

In 2008, Midwest lost a record $477 million, although much of that stemmed from accounting adjustments. The airline lost more than $25 million during the first three months of 2009, and Bedford said the tide of red ink made it difficult for Midwest to invest in technology, marketing and other areas needed to help the airline grow. Republic, he said, will bring badly needed capital to Midwest.

In 2008, Republic reported revenue of $1.48 billion and posted net income of $84.6 million. It mainly flies regional routes for larger carriers, such as United Express for United Airlines Inc. Midwest accounts for about 5% of Republic's regional airline services revenue.

Republic's revenue and profits have grown steadily since it became a publicly traded company in 2004. Republic carries a lower cost structure than larger airlines in part because its pilots receive less money, and because Republic isn't burdened with a heavy pension liability, industry consultant Vaughan Cordle said.

Hoeksema said that because Republic is a larger airline, it can operate Midwest more efficiently, owing to economies of scale.

AirTran also cited economies of scale during its hostile takeover attempt of Midwest two years ago. That campaign failed when TPG/Northwest outbid AirTran, which has since beefed up its operations at Mitchell.

Hoeksema said AirTran's takeover attempt was much different from the Republic sale - mainly because AirTran would have eliminated the Midwest brand. AirTran executives said they would have greatly expanded Midwest if they had acquired the carrier.

'I'm very comfortable'

Hoeksema, 63, who has led Midwest since it began offering regularly scheduled passenger service, said his decision to retire was long planned and not difficult.

"I'm very comfortable with transitioning out and letting the new leadership transition in," he said.

With the Midwest acquisition, and Republic's disclosure Monday of its plans to buy Denver-based Frontier Airlines for just under $109 million, Republic could end up owning two carriers, along with its business of flying regional routes for large airlines.

The proposal to buy Frontier, which would help that carrier emerge from Chapter 11 bankruptcy, requires a court-supervised auction, at which another buyer could outbid Republic.

Bedford said buying and operating Midwest and Frontier carried higher risk but provided ways for Republic to diversify its revenue.

Joe Taschler of the Journal Sentinel staff contributed to this report.