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Midway Airlines Ends Struggle, Liquidates
By EMERY P. DALESIO
Associated Press Writer
RALEIGH, N.C. (AP)--Midway Airlines, a regional carrier for US Airways, gave up its struggle to stay in the air Thursday and will sell its remaining assets to pay off creditors.
The airline filed court papers in federal bankruptcy court converting the long-struggling airline's reorganization effort into a liquidation. The company had filed for bankruptcy protection in August 2001.
``Midway surrenders,'' said Gerald Jeutter Jr., an attorney at a bankruptcy court hearing.
Judge A. Thomas Small signed the order requiring the company to account for its debts and turn over its assets within 15 days to a court-appointed trustee. The trustee will recommend to the judge which debtors are paid and how much.
Midway chief executive Robert Ferguson said the airline's remaining assets total almost $50 million, primarily two jets owned by Midway and spare parts.
He said he expected the assets to be sold within three or four months.
Employees will receive distributions from their 401(k) retirement plans, Ferguson said. The bankruptcy trustee will decide whether workers receive any continuing health care coverage or collect vacation pay, he said.
Midway had 188 employees, including about 85 pilots, Ferguson said.
Midway, which flew 30 daily round trips, parked its eight aircraft Wednesday night. US Airways customers were rerouted onto other flights, spokesman David Castelveter said Thursday.
Jack Butler, an attorney representing US Airways at the bankruptcy hearing, said the company had loaned Midway $8.6 million since December to keep it flying. But Midway had been unable to operate its entire flight schedule in the past month, Butler said.
Earlier this month, Midway struck a last-minute deal with members of its pilots' union on concessions demanded by an unidentified investor Ferguson said was ready to pump in $15 million to $20 million under the right conditions. The investor subsequently rejected the deal as inadequate, Ferguson said.
``I guess I would like to blame the pilots,'' he said.
Midway had sought to extend its contract with its pilots from six to 10 years and to fly planes larger and smaller than the current fleet of 50-seat Canadair regional jets. Members of the Air Line Pilots Association agreed to fly different planes but not to extend their contract.
``The prerequisite was to bring some certainty on costs,'' Butler said, explaining why the investor sought to extend the pilots' contract.
A new proposal was offered to the pilots union over the weekend, but it failed to include a detailed business plan explaining how the proposed concessions by pilots would result in the airline's survival, said Mark Stewart, chairman of the Midway pilot's unit of the ALPA.
``Many of us have seen our carrier shut down before. No one should have to experience this once, let alone on numerous occasions,'' Stewart said.
Midway filed for bankruptcy protection in August 2001, listing assets of $318 million and liabilities of $232 million. The company posted losses of $15 million in 2000 and another $15 million in the first six months of 2001.
Midway continued flying until Sept. 12, 2001--the day after terrorist attacks in the United States--and the company laid off 2,400 workers.
The airline returned to the air two months later thanks to $10 million from the national airline bailout program passed by Congress in response to the attacks.
The airline was grounded again in July 2002. It received a cash infusion from US Airways and began operating a year ago under the US Airways Express banner.
At its peak, the airline based at Raleigh-Durham International Airport had 130 daily departures and 2,400 employees.
Pilot B.J. Jaros, who attended the brief court hearing, said afterward he was optimistic about finding another job. Jaros said he'd cut his personal debt to be able to survive a tough spell, but that most Midway pilots would be strained by having to start over with a new carrier.
``There are a lot of guys with families and houses and they're just rocked by all this,'' Jaros said.
He said starting pay for pilots at some commuter or corporate airlines is as low as $17,000 a year.
By EMERY P. DALESIO
Associated Press Writer
RALEIGH, N.C. (AP)--Midway Airlines, a regional carrier for US Airways, gave up its struggle to stay in the air Thursday and will sell its remaining assets to pay off creditors.
The airline filed court papers in federal bankruptcy court converting the long-struggling airline's reorganization effort into a liquidation. The company had filed for bankruptcy protection in August 2001.
``Midway surrenders,'' said Gerald Jeutter Jr., an attorney at a bankruptcy court hearing.
Judge A. Thomas Small signed the order requiring the company to account for its debts and turn over its assets within 15 days to a court-appointed trustee. The trustee will recommend to the judge which debtors are paid and how much.
Midway chief executive Robert Ferguson said the airline's remaining assets total almost $50 million, primarily two jets owned by Midway and spare parts.
He said he expected the assets to be sold within three or four months.
Employees will receive distributions from their 401(k) retirement plans, Ferguson said. The bankruptcy trustee will decide whether workers receive any continuing health care coverage or collect vacation pay, he said.
Midway had 188 employees, including about 85 pilots, Ferguson said.
Midway, which flew 30 daily round trips, parked its eight aircraft Wednesday night. US Airways customers were rerouted onto other flights, spokesman David Castelveter said Thursday.
Jack Butler, an attorney representing US Airways at the bankruptcy hearing, said the company had loaned Midway $8.6 million since December to keep it flying. But Midway had been unable to operate its entire flight schedule in the past month, Butler said.
Earlier this month, Midway struck a last-minute deal with members of its pilots' union on concessions demanded by an unidentified investor Ferguson said was ready to pump in $15 million to $20 million under the right conditions. The investor subsequently rejected the deal as inadequate, Ferguson said.
``I guess I would like to blame the pilots,'' he said.
Midway had sought to extend its contract with its pilots from six to 10 years and to fly planes larger and smaller than the current fleet of 50-seat Canadair regional jets. Members of the Air Line Pilots Association agreed to fly different planes but not to extend their contract.
``The prerequisite was to bring some certainty on costs,'' Butler said, explaining why the investor sought to extend the pilots' contract.
A new proposal was offered to the pilots union over the weekend, but it failed to include a detailed business plan explaining how the proposed concessions by pilots would result in the airline's survival, said Mark Stewart, chairman of the Midway pilot's unit of the ALPA.
``Many of us have seen our carrier shut down before. No one should have to experience this once, let alone on numerous occasions,'' Stewart said.
Midway filed for bankruptcy protection in August 2001, listing assets of $318 million and liabilities of $232 million. The company posted losses of $15 million in 2000 and another $15 million in the first six months of 2001.
Midway continued flying until Sept. 12, 2001--the day after terrorist attacks in the United States--and the company laid off 2,400 workers.
The airline returned to the air two months later thanks to $10 million from the national airline bailout program passed by Congress in response to the attacks.
The airline was grounded again in July 2002. It received a cash infusion from US Airways and began operating a year ago under the US Airways Express banner.
At its peak, the airline based at Raleigh-Durham International Airport had 130 daily departures and 2,400 employees.
Pilot B.J. Jaros, who attended the brief court hearing, said afterward he was optimistic about finding another job. Jaros said he'd cut his personal debt to be able to survive a tough spell, but that most Midway pilots would be strained by having to start over with a new carrier.
``There are a lot of guys with families and houses and they're just rocked by all this,'' Jaros said.
He said starting pay for pilots at some commuter or corporate airlines is as low as $17,000 a year.
