JI gets DOT approval

RDU Jetblast

Veteran
Aug 20, 2002
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North Carolina
Midway plans get DOT approval
But airline still needs loans, jets
By DUDLEY PRICE, Staff Writer
MORRISVILLE -- Midway Airlines'' plans to emerge from bankruptcy as a commuter affiliate for US Airways were boosted Wednesday when the U.S. Department of Transportation approved the arrangement.
Midway, which hasn''t flown since July 17, now intends to begin flights Dec. 1, DOT spokesman Bill Moseley said.
But the Morrisville-based carrier still hasn''t met the terms of its agreement with US Airways, and pressure is rising on the airline to meet those requirements or face a forced liquidation.
On Wednesday, U.S. Bankruptcy Judge A. Thomas Small gave Midway officials until Jan. 30 to produce a reorganization plan if the airline is not in the air before then.
Midway, which has been under Chapter 11 bankruptcy protection for 14 months, already has missed its own timetable for filing the plan, but this is the first time the judge has set a deadline. If Midway can''t show how it expects to operate as a viable business, the judge could dismiss the case or convert it to Chapter 7 bankruptcy rules and order a sale of assets to satisfy creditors.
US Airways had hoped Midway would begin flying connector flights at Raleigh-Durham International Airport this month. But at a hearing in bankruptcy court on Wednesday, Midway attorney Jeb Jeutter said the carrier still doesn''t have a $5 million security loan for working capital or leases for 18 regional jets, which the US Airways agreement requires.
Jeutter said Midway is negotiating with jetliner lessors and had two commitments for the loans.
Everything is a go, he said. Things are on track.
Jeutter said the airline has been busy settling administrative claims with creditors and that the company intends to meet Judge Small''s Jan. 30 deadline.
Aviation consultant Michael Boyd said Midway may be having trouble getting a loan because it doesn''t have any aircraft leases. The regional jets Midway needs are in demand by large airlines that want to downsize equipment on flights.
Nobody wants to invest in anything that''s risky right now, said Boyd, president of the Evergreen, Colo.-based Boyd Group. And at this point, are you going lease [planes] to strong operator or Midway, which is a paper operator?
Once the Triangle''s busiest carrier, Midway filed for bankruptcy Aug. 13, 2001, and shut down all flights after the September terrorist attacks. The company resumed flights in December after receiving federal airline bailout funds but grounded itself again in July.
Midway initially had four months to file a reorganization plan after filing for bankruptcy, said Jeff Cook, staff attorney for the Eastern District Bankruptcy Administrator. Midway never filed the plan but asked for an extension, which the court granted, he said.
Midway said last summer it planned to submit its plan on or near Sept. 1. Cook said Midway now might feel more pressure to file a plan because Judge Small set the latest deadline. He said he will ask the judge to convert the case to Chapter 7 if a plan isn''t submitted.
Staff writer Dudley Price can be reached at 829-4525 or dprice@newsobserver.com.