Midway Airlines Files For Bankruptcy; Jobs And Flights Cut
Posted August 31, 2001
RALEIGH — Midway Airlines has announced that it has filed for
bankruptcy protection, citing a decline in business travel in the Raleigh-Durham area as a major reason for its decision.
In a press conference Tuesday morning, Midway Airlines CEO Robert Ferguson outlined reasons for the company's decision.
"Perhaps the only way I can describe it is hideously disappointing," he says. "The principal cause of the filing of the Chapter 11, at the time that it occured, is a precipitous drop in business traffic in Raleigh-Durham."
Just before midnight, Midway employees started receiving phone calls alerting them that they would be out of a job. Others learned of the news when they arrived at work Tuesday.
"We were very shocked. We didn't think it would take place this fast," says former employee Katrina McClurkin.
Tim Jacobs, who was a ramp worker for the airline, doubts Ferguson is sincere. Especially after finding out that in addition to losing his job, he will not get any money for hours he has already worked unless he makes a claim in bankruptcy court.
"They said they sold 17 jets. Maybe they should have sold 18 jets and paid the employees with it," he said.
Midway is cutting its work force in half, effective immediately. About 700 employees will be out of a job.
The reduction includes approximately 183 pilots, 99 flight attendants, 91 customer service agents, 126 fleet service agents — including baggage handlers — and 201 other personnel.
The company — based in Morrisville — also says it will reduce its fleet by 17 aircraft and stop service to nine destinations.
Midway blames a huge drop in business traffic experienced by all airlines this year.
In a written press release issued late Monday, Ferguson said, "despite economic conditions that have made a portion of our route network unprofitable and unsustainable, we are confident we will return profitability by reorganizing and reducing our route network to traditionally profitable routes."
The sharp drop in business travel is affecting more than just airlines. It is also being felt in the hotel industry.
In Durham, business travel accounts for about 50 percent of all overnight stays. But with more people conducting their business over the Internet, more hotel rooms are staying vacant, which is cutting into profits.
"It's a double-digit decline. It's not stabilized yet. I don't think we can say we've reached the bottom yet," says hotel general manager Ron Hunter.
Ferguson knows a recovery for the airline will not take place quickly, but says by slashing its workforce and keeping only its most profitable routes, he believes that Midway can emerge from bankruptcy.
Ferguson also says that a merger has not been ruled out.
"Clearly, we will be exploring possible sale alternatives. There are, in our view, a few people that make sound, logical sense as potential parties in that regard. I will tell you that nobody is waiting in the wings with a big check," he says.
RDU officials say they see no reason for gloom and doom for travelers.
"Given the strength of this market, you are not only going to have carriers that are already serving here looking to expand their offerings, but you are also going to have some that aren't here today, likewise looking to fill that gap," says RDU airport director John Brantley.
Several airlines have reduced their fares significantly to combat the decline in business travel, and this week many also announced they would eliminate Saturday night stay-overs.
Starting Tuesday, Aug. 14, Midway ended service to:
On Sunday, Aug. 19, Midway will stop flying to Los Angeles. On Monday, Aug. 20, the airline will no longer fly to Birmingham, Ala. and Providence, Rhode Island. San Jose routes will be discontinued on August 31. Daily flights to 20 other cities where Midway flies will also be reduced.
Midway says it will refund all tickets that will be affected and is working to get passengers on other flights. Midway passengers who have tickets for existing flights can expect delays.