Blue Skies Now For Midway Airlines; Turbulence May Follow
Posted August 24, 2001 8:36 a.m. EDT
RALEIGH — Midway Airlines
, mired in financial problems, filed for bankruptcy last week. On Thursday, a bankruptcy judge approved $10 million of a $15 million loan to keep the company flying.
Midway officials appeared in front of Judge Tom Small in Federal Bankruptcy Court in Raleigh Thursday, asking for the approval of the debt-financing loan from Wexford Capital, a Connecticut venture-capital fund that owns another regional airline. If approved, laid-off workers could receive back wages and health benefits.
Robert Ferguson, CEO of Midway Airlines, says the loan gives the company a breather.
"This is good for a couple of weeks and then when we pick up the remainder of the money, we should probably do good for the duration," he says.
Attorneys representing Midway creditors objected to the approval, claiming that their clients' interests are not well-enough protected.
"For the existing flight attendants those who still have jobs, this financing gives Midway Airlines at least a chance to stay alive and for those people to keep their jobs," says attorney Billy Brewer.
Other officials are not optimistic about the airlines' future.
"Right now, without something fanastic happening, like someone buying them and pumping them with money, there is no way to go," says Denver International Airport representative Douglas Jessop.
The ruling means that Midway Airlines will be able to make payroll on Friday, but the laid-off workers will not be able to receive back pay and health benefit until a judge makes another ruling. That ruling is expected to come within two weeks.
The airline has already laid off 700 workers, eliminated 17 airplanes and cancelled flights to nine cities, including Los Angeles, Birmingham and Providence.