Local News

Midway Airlines' Reorganization Leaves Passengers Scrambling

Posted July 19, 2002

— For the second time in 10 months, Morrisville-based Midway Airlines has shut down, discontinuing all flights and leaving passengers and employees scrambling.

The news took many Midway passengers by surprise when they arrived at RDU International Thursday, expecting to get to their destination.

"There was no notice. Everyone was trying to go on vacation, and they are never going to get us out of here today," Midway passenger Suzanne Fischer said.

Midway Airlines Corp., which filed for bankruptcy last year after the Sept. 11 terrorist attacks, has signed a letter of intent to become a part of US Airways.

US Airways tried to help people who already had tickets with Midway Airlines. For the better part of the day, the lines at the US Airways desk at RDU International were long, and patience was at a premium.

"An early lunch has turned into an all-day affair. I'm tired, my feet hurt and I'm hungry," Midway passenger Karen Cannady said.

Linda Garcia, who was celebrating her birthday, said she was not going to let Midway Airlines keep her grounded.

"I'm going to pay $550 to go on Delta," she said. "Why not. I want to get home, so I'm going to get home."

Midway Airlines announced late Wednesday that it suspended flight operations at the close of business July 17 while it reconfigures its fleet and adjusts its business model to take advantage of a new business opportunity with US Airways, Inc.

Arlington, Va.-based US Airways said Midway will operate as part of its US Airways Express, flying a fleet of regional jets beginning in October.

The eight-year agreement is subject to several conditions including Midway's ability to secure an additional $5 million in capital, additional planes and reaching agreements with its various unions.

The airline served the Triangle with 16 daily flights along the east coast.

Midway eliminated its fleet of six Boeing 737 aircraft, and will lay off 400 workers, with a small group of employees staying on indefinitely.

Robert Ferguson, Midway's chief executive and president, said US Air would pay Midway a fee to provide the service, but he declined to say how much the fee would be.

"In order to ensure Midway's ongoing success, the agreement provides it will be paid a fee for the services we provide which we believe will be adequate to ensure our continued profitability in the future," he said.

Ferguson said he hoped to eventually hire back at least two-thirds of the Midway employees being laid off. Until then, unpaid wages to employees would be paid on the individual employee's next regularly scheduled pay date.

Midway had filed for Chapter 11 bankruptcy protection in August 2001 citing a drop in number of passengers. At the time, the carrier listed assets of $318 million and debts of $232 million.

Midway continued flying on a reduced schedule, but stopped operations altogether after Sept. 11. It resumed flying Dec. 19 after receiving a $12.5 million grant from the federal airline bailout program.

"Between the economy, the competitive environment here, and frankly, the airline industry in its own circumstances, we were unable to find a way to be profitable. Ultimately, businesses have to make a buck, and we were unsuccessful in doing that," Ferguson said.

He estimated that his airline was losing $1 million to $1.5 million a month since resuming operations.

US Airways has said the addition of regional flights is part of its reorganization plan, which includes a $1 billion federally guaranteed loan and a nearly equal sum in wage and benefit concessions from pilots, flight attendants and other workers.

US Airways has been working on its own plan to avoid bankruptcy. Last weekend, the airline secured $465 million in annual savings from its pilots. Officials are now pressing their last two unions on concessions.

Officials said they would like $261 million in savings from machinists and reservation agents. The Virginia-based airline is also seeking up to $300 million in concessions from various debt holders and suppliers.

Passenger Information:

As part of the arrangement, ticketed passengers holding reservations for future Midway flights will be

re-accommodated

on US Airways, subject to space and class availability, or their tickets will be

refunded

by Midway.

Passengers seeking to travel on US Airways must first visit a Midway Airlines ticket counter at the departure airport to receive the necessary travel documents for use on US Airways.

At RDU International, Midway is located in Terminal C; US Airways is located in Terminal A.

Passengers can also go to Midway's corporate headquarters to have electronic tickets converted to paper. The building is located at 5151 McCrimmon Pkwy, Suite 208, in Morrisville. (Two miles south of the airport off Airport Boulevard.)

Complete details are available

online

or by calling Midway at 1-800-446-4392.

US Airways also will implement a program to allow Midway Airlines' frequent fliers to convert their credits to Dividend Miles for future use on US Airways and partner carriers upon completion of the agreement.

US Airways Express will have an initial operating a fleet of five 50-seat Bombardier CRJ regional jets, with that fleet growing to up to 18 CRJs by April 2003, according to the agreement.

Ferguson added that the arrangement between the two airlines is contingent upon approval by the bankruptcy court.

A Troubled Year:

  • July 17, 2002: Midway announced it would temporarily suspend flight operations commencing at the close of business, while it reconfigures its fleet and adjusts its business model to take advantage of a new business opportunity with USAirways, Inc; 400 employees will be let go.
  • Dec. 19, 2001: The airline launched its first flights since it shut down operations.
  • Nov. 30, 2001: The government approved Midway just over $10 million in federal bailout money.
  • Oct. 5, 2001: Midway learned it was entitled to millions of dollars as part of the government's bailout program.
  • Sept. 12, 2001: Midway suspends all operations, putting about 1,700 employees out of work.
  • August 14, 2001: Midway filed for Chapter 11 bankruptcy. The airline laid off 700 employees and reduced its fleet in an effort to help save cash while the company reorganized its finances.
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