Saturday, February 22, 2003 8:06AM EST
Raleigh NC News and Observer
Midway plan lacks crucial element
The airline turns in its reorganization strategy to bankruptcy court on time but does not explain where it will obtain the money to carry it out
By CHRIS SERRES, Staff Writer
Midway Airlines told bankruptcy court Friday that after seven months of searching it still hasn't found the investor it needs to emerge from bankruptcy.
The Morrisville carrier met a court-appointed deadline Friday to file a reorganization plan, but the plan did not explain where the airline would find enough additional money to pay its bills and add jets.
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Midway CEO Robert Ferguson said the company is talking to several potential investors but declined to provide names. He also declined to disclose how much the company plans to raise from the outside investor. We have found investors in the past, and we are confident that we will find them again, he said.
The company has been searching for an investor since at least July, when it reached an agreement to become a regional airline flying under the US Airways name. Currently, the airline has three, 50-seat jets in operation.
US Airways can foreclose on all of Midway's assets if the airline's reorganization plan is not confirmed by bankruptcy court. And there is very little chance that the plan will be confirmed until Midway tells the court where it will obtain enough money to continue operating, said Marjorie Lynch, the administrator for the Eastern District Bankruptcy Court.
What they filed today is a skeletal plan, but the meat isn't here, Lynch said. We still don't know how they will become the regional carrier they want to be.
Under the reorganization plan, all of Midway's existing stock will be wiped out. The company will issue new shares, most of which will be distributed between the yet-to-be-named outside investor, US Airways and the unsecured creditors, Ferguson said.
Midway plans to file a disclosure statement, detailing how many shares each party will receive, once the outside capital is raised. We realize that this plan requires certain additional elements for it to be complete, said Ferguson of the reorganization plan.
But Ferguson said he does not know when that additional information will be filed with the court.
Even if the plan is approved, Midway will be a much smaller airline than it was in 2001, when the company filed for Chapter 11. At its peak, Midway had 2,700 employees and made 225 trips a day. Now, the airline has 130 employees and offers 18 trips a day.
Staff writer Chris Serres can be reached at 836-4906 or
[email protected].