AirTran Holdings Inc. said on Sunday it has walked away from its hostile bid to acquire Midwest Air Group Inc. as Midwest has accepted a rival takeover offer.

AirTran said Midwest's board has chosen to sell the airline to a private equity firm and a 'passive' investor. Additional details were not immediately available. Midwest said it would put out a statement shortly.

The Wall Street Journal reported on Friday that Northwest Airlines Corp. was considering partnering as a passive investor with one of the parties now weighing a bid for Midwest. Northwest could not be immediately reached for comment.

The parent of AirTran Airways said its tender offer expired and it ended negotiations with Midwest. Airtran's offer, which was first made public in November, was valued at about $380 million.

The Midwest board has chosen a path that will benefit current senior management by selling out to a private equity firm and a so-called 'passive' investor whose involvement will surely raise antitrust concerns, casting doubt for shareholders on whether a transaction can, in fact, close, Airtran said.

Airline analysts have said the industry needs consolidation to reduce excess seats and capacity from the system, so airlines can raise fares and derive savings from combining their operations.

The industry has been battered for years by low-fare competition and soaring fuel prices. A bid by US Airways Group for Delta Air Lines was rejected in January.

(Reporting by Jessica Hall in Philadelphia and Kyle Peterson in Chicago)