Midway?

AM49AAA

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Aug 20, 2002
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Bankruptcy court OKs Midway deal

The contract with fellow bankrupt carrier US Airways may strengthen the airline.



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Midway Airlines: Discuss Midway Airlines' deal with US Airways and what the suspension of Midway's operations means for the Triangle.







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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.
 
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AM49AAA

Member
Aug 20, 2002
92
0
Wasn''t there a court hearing yesterday to approve there operational restart?
 

airknocker

Member
Aug 21, 2002
52
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Starting an airline? Sept. 19,20&21 at Raleigh-Durham, Midway Airlines is auctioning off all office and ground equipment. Announcement appears in ad in 2nd August issue of Trade-A-Plane or see www.starmanauctions.com
 

flyguy121

Senior
Aug 20, 2002
360
0
Does anyone know if USAirways will be moving into Terminal C where Midway was or will they be moving next our present gates?
 

OldpropGuy

Advanced
Aug 20, 2002
185
8
Word is that the Midway pilot group will not approve the Jets for Jobs extortion! Seems that they, along with even the contract carriers, had rather stay out of work than allow for 50% of their jobs to go to furloughed U pilots, while their guys stay on the street. Can't say that I disagree with them.[:(] I just don't understand how the U pilots think they are that "special." After all, they are the ones that got us in this predicament with their self-centered scope clause.
 
C

chipmunn

Guest
The Midway Bankruptcy Plan of Reorgainzation (POR) approved by the Court requires the airline to become a US Airways Express carrier and approved US Airways $3.5 million investment in the company.

The US Airways deal requires J4J and without J4J the US Airways agreement and POR would become invalid, thus Midway could liquidate over their pilots refusing to sign on to J4J.

In fact, it may be possible for US Airways or another carrier to acquire Midway assets without Midway employees, just like in any other bankruptcy proceeding, which is a significant risk to the Midway pilots rejecting J4J (that has been signed by ALPA International).

Chip