Bankruptcy court OKs Midway deal
The contract with fellow bankrupt carrier US Airways may strengthen the airline.
SPEAK OUT
Midway Airlines: Discuss Midway Airlines' deal with US Airways and what the suspension of Midway's operations means for the Triangle.
STORY TOOLS
printer friendly version
send this story to a friend
SITE TOOLS
subscribe to our e-mail lists
get news, weather, movies on your PDA
By DUDLEY PRICE, Staff Writer
MORRISVILLE - Midway Airlines' plan to become a regional affiliate of US Airways won final approval Monday from the U.S. Bankruptcy Court.
Next up for the Morrisville-based carrier: securing a $5 million loan for working capital, leasing 18 regional jets to begin flights to three Northeastern cities and negotiating a new contract with its pilots union.
"We're really pleased the regional jet agreement was approved by the bankruptcy court," said Midway attorney Jeb Jeutter. "It's the backbone of our plan of reorganization."
With the endorsement of the bankruptcy court, Midway can begin planning a return to the air by Oct. 1. Midway would operate its own jets but US Airways would handle marketing, reservations, ground support and fuel.
Midway's logo would be replaced by the US Airways Express logo.
Before its bankruptcy a year ago last week, Midway operated 115 daily departures to 28 destinations from Raleigh-Durham International Airport.
US Airways joined Midway in Chapter 11 last week, but many aviation experts say the agreement between the two carriers could help both emerge stronger from bankruptcy.
US Airways lost $2.1 billion last year and about $500 million this year. But since filing for bankruptcy Aug. 11, a judge has allowed the airline to stop making payments on 57 old airplanes it had grounded. The airline also is expected to win concessions in future union negotiations.
Once the Triangle's busiest carrier, Midway scaled down flights a year ago and ceased all flights after the terrorist attacks in September. The airline resumed flights in December after receiving funds from the federal bailout program, but it grounded itself again July 17.
James Corridore, an aviation analyst for Standard & Poor's in New York, said Midway might have been forced to liquidate its assets if it had not contracted with US Airways.
"Midway didn't have much choice," Corridore said. "[US Airways] are making moves that will strengthen them and most likely make them a healthier carrier."
Steven Lott, business editor for Aviation Daily, an industry publication, agreed that US Airways will survive bankruptcy as a more competitive airline. "The downside," he said, "is you have two drowning men throwing a life preserver to each other, and there is no guarantee Midway will survive any better than it ever did."
The agreement that won approval Monday calls for US Airways to pay Midway's costs plus a profit for eight years. It could lead to Midway growing into a larger airline than it was before bankruptcy. Midway initially will lease 18 regional jets but can add an additional 48 regional jets at US Airways' option for a total of 66 planes.
Before its bankruptcy filing, Midway had a fleet of 40 jetliners and more than 2,000 employees.
US Airways also has promised to lend Midway as much as $3.5 million in return for Midway's turning over a security interest in its five landing slots at Washington's Reagan National Airport and New York's LaGuardia Airport.
The contract with fellow bankrupt carrier US Airways may strengthen the airline.
SPEAK OUT
Midway Airlines: Discuss Midway Airlines' deal with US Airways and what the suspension of Midway's operations means for the Triangle.
STORY TOOLS
printer friendly version
send this story to a friend
SITE TOOLS
subscribe to our e-mail lists
get news, weather, movies on your PDA
By DUDLEY PRICE, Staff Writer
MORRISVILLE - Midway Airlines' plan to become a regional affiliate of US Airways won final approval Monday from the U.S. Bankruptcy Court.
Next up for the Morrisville-based carrier: securing a $5 million loan for working capital, leasing 18 regional jets to begin flights to three Northeastern cities and negotiating a new contract with its pilots union.
"We're really pleased the regional jet agreement was approved by the bankruptcy court," said Midway attorney Jeb Jeutter. "It's the backbone of our plan of reorganization."
With the endorsement of the bankruptcy court, Midway can begin planning a return to the air by Oct. 1. Midway would operate its own jets but US Airways would handle marketing, reservations, ground support and fuel.
Midway's logo would be replaced by the US Airways Express logo.
Before its bankruptcy a year ago last week, Midway operated 115 daily departures to 28 destinations from Raleigh-Durham International Airport.
US Airways joined Midway in Chapter 11 last week, but many aviation experts say the agreement between the two carriers could help both emerge stronger from bankruptcy.
US Airways lost $2.1 billion last year and about $500 million this year. But since filing for bankruptcy Aug. 11, a judge has allowed the airline to stop making payments on 57 old airplanes it had grounded. The airline also is expected to win concessions in future union negotiations.
Once the Triangle's busiest carrier, Midway scaled down flights a year ago and ceased all flights after the terrorist attacks in September. The airline resumed flights in December after receiving funds from the federal bailout program, but it grounded itself again July 17.
James Corridore, an aviation analyst for Standard & Poor's in New York, said Midway might have been forced to liquidate its assets if it had not contracted with US Airways.
"Midway didn't have much choice," Corridore said. "[US Airways] are making moves that will strengthen them and most likely make them a healthier carrier."
Steven Lott, business editor for Aviation Daily, an industry publication, agreed that US Airways will survive bankruptcy as a more competitive airline. "The downside," he said, "is you have two drowning men throwing a life preserver to each other, and there is no guarantee Midway will survive any better than it ever did."
The agreement that won approval Monday calls for US Airways to pay Midway's costs plus a profit for eight years. It could lead to Midway growing into a larger airline than it was before bankruptcy. Midway initially will lease 18 regional jets but can add an additional 48 regional jets at US Airways' option for a total of 66 planes.
Before its bankruptcy filing, Midway had a fleet of 40 jetliners and more than 2,000 employees.
US Airways also has promised to lend Midway as much as $3.5 million in return for Midway's turning over a security interest in its five landing slots at Washington's Reagan National Airport and New York's LaGuardia Airport.