:down: FIRE FERGI, FIRE FERGI, FIRE FERGI, FIRE FERGI, FIRE FERGI, FIRE FERGI! :down:
Thursday, December 4, 2003 12:00AM EST
RDU's not-so new airline
In Wexford's plans, Ascent would be much like Midway, with one key difference
By DUDLEY PRICE, Staff Writer
If a Connecticut investment company wins approval to buy most of Midway Airlines' assets, it plans to christen the new carrier Ascent Airlines.
Under the new name, Ascent will look a lot like the old Midway.
Ascent will fly Midway's former planes as a commuter feeder for US Airways, as the bankrupt Midway was doing before it shut down Oct. 29. It will have the same headquarters offices in Morrisville and plans to hire former Midway employees. Former Midway president and chief executive Robert Ferguson has been offered identical titles with the new company.
But one item noticeably will be missing: A labor contract with the union representing the carrier's former pilots whose contract dispute this fall led to Midway being liquidated.
Midway's pilots said they're now wondering whether eliminating a contract with the feisty union wasn't part of the reason Ferguson asked U.S. Bankruptcy Judge A. Thomas Small to liquidate the company in late October. That way, if the airline was reborn, pilots could be rehired at lower salaries, and the new owners wouldn't be bound by the old contract's seniority rules.
"I think they planned this in advance," said former pilot Brad Berthold. "All the assets that are Midway Airlines will have miraculously been transferred to an entity with exactly the same managers, the same planes, same address and phone number ... and there are no contracts with pilots or flight attendants."
Ferguson denied the pilots' claim and said that he didn't learn of the potential buyer until after the court-ordered liquidation. Ferguson said that he had no choice but to ask the judge to liquidate the company because Midway, once the Triangle's busiest carrier, was simply out of money.
"The company was liquidated because it didn't have the ability to repay a $8.2 million loan to US Airways," Ferguson said.
Sale of Midway's assets is moving forward. Greenwich, Conn.-based Wexford Capital, which bailed out Midway with a loan two years ago, earlier this month offered to buy the bankrupt carrier's regional jets, operating certificate and related assets for $8.6 million. Wexford also would assume nearly $90 million in debt on the 50-seat regional jets. Also, Wexford would get options Midway had to acquire three additional regional jets.
Details about Wexford's plans, including the new Ascent name, were in a document filed Wednesday with the U.S. Department of Transportation.
Also on Wednesday, Small approved bidding procedures that would allow the sale to Wexford to be finalized next week unless another buyer surfaces willing to pay $550,000 more than Wexford.
Joseph Callaway, the court-appointed trustee who is liquidating Midway, said Wednesday that two other potential buyers had expressed an interest in the assets but added, "I'd be surprised if there is another bidder."
Steven Lott, business editor of Aviation Daily, a Washington-based industry publication, said not having a union contract to worry about might save Wexford some headaches, but the biggest reason anyone would want to buy Midway's assets is its regional jets. That's because the smaller planes are in demand, but banks are hesitant to loan carriers money to get them because of turmoil in the industry.
"There's plenty of demand for regional jets, but even the largest regional airlines are having a really hard time financing those new planes," Lott said. "Wall Street and investors are very, very jittery about the airline industry, so any way you can acquire additional planes for a reasonable price, companies will do it."
Still, Mark Stewart, leader of the Air Line Pilots Association chapter representing Midway's 85 former pilots, said he believes Ferguson asked to liquidate the company so that labor contracts wouldn't discourage a buyer such as Wexford.
"It certainly would appear this is what he had in mind all along," Stewart said. "If you don't have work rules, it's more savings and it's going into someone's pockets."
After 26 months in Chapter 11, Midway gave up its fight to exit bankruptcy because it was unable to reach an agreement with its pilots. Getting concessions from the pilots was a condition of a $10 million to $15 million loan from an unidentified investor that the airline said was needed to repay creditors if its bankruptcy protection was lifted, but the pilots never agreed to the needed concessions.
Staff writer Dudley Price can be reached at 829-4525 or
[email protected].
This is better than the "Heidi" game!!
