Midway deal hits snag
If talks this weekend are fruitless, the airline could be grounded next week
By DUDLEY PRICE, Staff Writer
Facing a possible court-ordered liquidation next week, Midway Airlines has been unable to reach a new labor agreement with its pilots that it needs to exit bankruptcy.
Midway's president and chief executive, Robert Ferguson, notified the pilots by e-mail Thursday that a tentative contract agreed to two weeks ago had been rejected by an unidentified investor that the Morrisville-based carrier was counting on for at least $5 million.
Midway now plans to make one final proposal to the pilots that would be acceptable to the investor, according to the e-mail supplied by the pilots union.
Meanwhile, Midway said it might ground one of its eight regional jets as early as today because it has been unable to hire pilots.
Mark Stewart, a Midway pilot who heads the airline's chapter of the Air Line Pilots Association, said the two sides could resume talks as soon as this weekend.
"I personally remain optimistic this can be worked out," Stewart said. "It's kind of hard to say [what will be done] when we don't know what will be put forward."
Ferguson was unavailable Friday.
Once the Triangle's busiest carrier, Midway has been trying to reinvent itself as a commuter affiliate of US Airways. But the airline, which has been in Chapter 11 for about 26 months, needs a loan to pay off creditors after it leaves bankruptcy.
US Airways says that it has identified an unidentified investor that is willing to provide the financing but that the investor is insisting on concessions from the pilots.
Midway faces a hearing Thursday when U.S. Bankruptcy Judge A. Thomas Small said he will decide whether to convert the carrier's case to Chapter 7. If the case is converted, the airline could be liquidated and its assets sold to repay creditors.
Exactly what caused the investor's rejection of the earlier agreement is unclear. Ferguson had said the key concessions involved an extension of the terms of the existing contract from six to 10 years and the pilots' agreement to fly aircraft other than Midway's existing fleet of 50-seat Canadair Regional Jets. The pilots had agreed to fly a variety of planes but declined to extend their contract in an oral agreement reached only minutes before a liquidation hearing Oct. 9.
That last-minute agreement prompted Small to postpone considering liquidation until Thursday to see whether the agreement satisfied the investor.
Stewart said Friday that Ferguson had also wanted a list of other concessions that pilots didn't agree to, but he declined to elaborate.
US Airways, meanwhile, is making plans to rebook passengers if Midway is grounded next week, said US Airways spokesman David Castelveter.
US Airways flies to all the destinations served by Midway with either US Airways Express or US Airway mainline flights. If Midway ceases flights, passengers would be rebooked, either on US Airways or other carriers, or given refunds, he said.
"We are aware that the bankruptcy judge may convert Midway to Chapter 7 on Oct. 30th. While we hope that Midway finds a way through this difficult time, we are taking prudent steps to ensure that current operations go as smoothly as possible," Castelveter said.
Midway operates five daily round-trip flights between Raleigh-Durham International Airport and Reagan National Airport in Washington and three from RDU to New York's La Guardia Airport. Midway also operates 22 daily round trips from Reagan to 11 destinations: Albany, N.Y.; Nashville, Tenn.; Burlington, Vt.; Manchester, N.H.; Charleston, S.C.; Greenville-Spartanburg; S.C.; Huntsville, Ala.; Jacksonville, Fla.; Portland, Maine; Louisville, Ky.; and Toronto.
