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Why Did Midway Get Rid Of The A320?

Tue Sep 26, 2000 2:06 pm

Why did Midway get rid of the A320s? Did they just not like them or what? I thought they looked kind of nice. Did it not fit into their fleet? They dumped the A320 and got the 737-700. The 737-700 (excellent aircraft to fly in btw) is great too but why did they go for it instead? Just curious as to why they did what they did...

(Whenever you wake up MD, here it is  )
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Joined: Tue May 18, 1999 3:49 am

RE: Why Did Midway Get Rid Of The A320?

Tue Sep 26, 2000 2:13 pm

The A320's were retired when Midway really didn't need the capacity on their East Coast flights (F100's and CRJ's worked wonderfully), and had no trans-con flights to use them on.

They weren't directly replaced with the 737-700, as those just came online to boost capacity in the East (Midway made a bigger name for themselves in the few years since the 320's), as well as for their new trans-con flights.

F L Y 7 7 7 U A L

RE: Why Did Midway Get Rid Of The A320?

Tue Sep 26, 2000 2:15 pm

Oh yes Midway have really made a name for themselves with a pathetic route structure and scummy RDU hub...

Weren't the 320's retired cuz they could make more money selling it than operating it?
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Joined: Wed Jun 21, 2000 7:56 am

RE: Why Did Midway Get Rid Of The A320?

Tue Sep 26, 2000 2:59 pm

Here is an article from Jan. 28, 1996...

January 28, 1996

The News & Observer

Midway decides to retrench

By Dudley Price; Staff Writer

Page: B1

DURHAM - Midway Airlines, which has enjoyed success since taking over the American Airlines hub at Raleigh-Durham International Airport, has flown into a financial

Because of seasonal swings in ticket sales to resort destinations and an unusual hurricane season that ripped the Caribbean islands last fall, the airline says it no longer
needs four of the jetliners it leases and will return them.

The return will leave the airline with 13 planes, and RDU will be without daily nonstop flights to the Caribbean or Mexico.

The reduction also means that 50 or more Midway pilots and flight attendants could be furloughed.

Vice President Joanne Smith said Saturday that Midway overestimated the popularity of San Juan, Puerto Rico, and Cancun, Mexico, as travel destinations. Then a
record hurricane season left the Caribbean islands of St. Thomas and St. Martin reeling.

Midway, which has headquarters in Durham, began operations at RDU in March, picking up destinations dropped by American Airlines as it downsized its hub.

The cities Midway picked up were primarily heavily traveled business destinations, such as Washington, New York and Boston, and leisure destinations in Florida. In May,
Midway President John Selvaggio said the privately owned airline was earning a profit.

In the fall, Midway scheduled additional resort offerings with flights to Cancun, San Juan, St. Thomas and St. Martin, using five A320 Airbus jetliners it had leased a few
months earlier.

One of the most deadly hurricane seasons in memory grounded the St. Thomas and St. Martin flights before they ever started, Smith said. "The hurricanes just wiped out
St. Thomas and St. Martin," she said.

The number of passengers initially flying to Cancun and San Juan was disappointingly low, she said. In October and November, only three out of every 10 seats were
occupied, she said. Planes to those destinations now are about 60 percent full. The weak ticket sales combined with bad weather in December and this month caused
revenues to drop, but Smith declined to say how much.

"I don't know if we were profitable. We'd like to be more profitable, and with these changes we will be," Smith said.

Because bookings to Cancun and San Juan are heavy through Easter, Midway plans to continue those daily flights through April. After that, the flights probably will be
offered several times a week, but not daily, Smith said.

Midway probably will resume daily flights to Cancun and Mexico next winter, but no decision has been made whether to offer any flights from RDU to St. Thomas or St.
Martin next fall.

"What we learned is maybe we didn't need 148-seat aircraft, knowing the Caribbean is not strong for us and that {leisure travel} is very seasonal," Smith said.

No change is planned for Midway's daily flight from RDU to Las Vegas, which also uses an Airbus.

Midways is a much different airline then it was when it was first getting started. The Airbus now would have been just fine to keep but that was then and this is now. As for the 737-700 here was a clip from an article while they were looking...

Airline faces market forces


Page: D1

MORRISVILLE -- Facing competition from Southwest Airlines and MetroJet, Midway Airlines is considering cutting costs by acquiring more economical jetliners and
planning enough new routes to potentially more than double its nonstop destinations from Raleigh-Durham International Airport.

The Morrisville-based carrier is talking with Boeing and the French manufacturer of Airbus about acquiring large jetliners that apparently could be used to replace
Midway's eight Fokker 100s. The 98-seat Fokkers, while relatively new, are no longer manufactured and are costly to maintain.

Meanwhile, Midway is continuing to acquire 50-seat Canadair Regional Jets and will have a total of 20 of those planes by the end of the year. That's so many planes that
Midway plans this summer to exercise an option for five more gates in Terminal C, which will give the carrier a total of 17 gates.

Midway also has options or orders for 20 additional CRJs by the end of 2002. If all those options are exercised, Midway will have enough planes to offer 150 daily
departures to 37 nonstop destinations from RDU.

That would be the most destinations offered by a single carrier since American and American Eagle offered 65 nonstop destinations when their hub was at its peak in

Midway currently offers 62 daily departures to 16 nonstop destinations from RDU using its fleet of eight Fokkers and 12 CRJs.

Midway president Robert Ferguson declined to comment about talks with Boeing or the Airbus manufacturer. But the airline is considering acquiring economical Boeing
737-700 jetliners, Boeing 717 jetliners and Airbus A319 jetliners with seating ranging from about110 to 125 seats to replace the Fokkers.

In a filing with the Securities Exchange Commission in February, Midway said "the Fokker F-100 is no longer being manufactured and the company's cost to maintain this
aircraft generally exceeds the cost of those aircraft that continue to be produced."

An announcement about the new planes may be made this month.


After choosing the 737-700

April 1, 2000

The News & Observer

Change in the air at Midway

By Dudley Price; STAFF WRITER

Page: D1

MORRISVILLE -- With matching white fuselages and yellow tails, all of Midway Airlines' jetliners look the same. But the costs to fly them vary greatly, and Midway is
betting that 17 super-efficient Boeing 737s the airline is getting will fly the company to more profitable heights.

Company earnings have been lackluster in recent months, but some industry experts say the strategy is sound and makes the company, which bills itself as the Triangle's
hometown airline, well positioned for long term growth.

"The 737s were a good choice for them," said Benet Wilson, editor of Commuter/Regional Airline News, an industry publication. "I, like everyone else, questioned them
getting them but they will be cheaper in the long haul to operate and will make the company more efficient going into the future."

Some aviation experts were skeptical when the company announced last June that it planned to replace its eight Fokker F100s, which are costly to operate, with the
128-seat 737s.

Midway said that it would acquire 17 of the 737s by late 2002 and had options to buy 10 others. Two of the 737s are already in service and Midway will operate five by
the end of the year.

American Airlines had already tried using large planes at its hub at Raleigh-Durham International Airport, including DC-10s with nearly 300 seats. American didn't make
enough profit and turned the RDU hub over to Midway, which moved here from Chicago five years ago.

For Midway executives, however, the decision to replace Fokkers with 737s was easy. The 737s have 30 more seats than the 98-seat Fokkers but cost the same amount
to operate.

In an industry where single-digit profits are the norm, getting the equivalent of 30 more seats to sell on each flight could provide a huge financial boost.

Although Midway is losing one of its biggest competitors at RDU - MetroJet, which is pulling its last flights in June - the more efficient planes are especially needed now
because rising fuel prices are driving Midway's costs upward at a time when passenger yields - the average fare paid per mile - are dropping.

During the fourth quarter, the passenger yield was 19.5 cents, down from 20.9 cents a year earlier even though Midway, the Triangle's busiest airline, is carrying
increasing numbers of passengers.

Yields are decreasing because competition from Southwest and MetroJet has driven down ticket prices. Also, as the airline adds new destinations, more of the travelers
riding on Midway are connecting passengers, who pay lower fares than business travelers starting their journeys at RDU, company officials said.

Midway plans to increasingly rely on the 737s to help its bottom line, but tailoring the fleet to markets served from RDU has been a goal of Robert Ferguson since he
became the company's president and chief executive officer in 1997.

"Our story really hasn't changed in any substantive respect," Ferguson said. The company's goal is to primarily serve local passengers.

The problem was Midway had the wrong planes for local markets when it moved here five years ago from Chicago, Wilson said. The airline fleet consisted of 12 Fokkers
and one 148-seat Airbus. Those planes were designed for longer flights and were too costly to operate from RDU.

"The mission changed at RDU," Wilson said. "They were doing shorter-haul flying, and the planes were expensive to operate."

Since Ferguson took Midway's helm, four Fokkers and the Airbus have been returned to their lessors and the airline recently announced it would take a $5.25 million
first-quarter charge to terminate leases on four more Fokkers by mid-2001, two years ahead of schedule.

In their place, Midway has been acquiring 50-seat Canadair Regional Jets, which are more efficient for shorter flights and can be profitable with only about half the seats
filled. Midway currently operates 20 CRJs and will have 26 in operation by late 2001. The new planes are making a difference to Midway's bottom line; the once
money-losing company has been profitable for 13 consecutive quarters.

The first CRJs were acquired with $36 million raised from Midway's first stock offering in 1997.

Midway plans to use proceeds of another stock offering announced this week to help pay for more new CRJs and the 737s, which it will buy or lease.

Midway plans to raise between $32 million and $45 million from the offering. The amount varies because the stock sale is limited to current shareholders, who can buy
one share at $5.20 for each share they own.

Cary billionaires Jim Goodnight and John Sall, the co-founders of SAS Institute, own 47 percent of Midway's stock. The partners have agreed to exercise their rights and,
if no other shareholders buy additional stock, to purchase additional shares. Their total purchase could be as much as 6.2 million shares with a value of $32 million.

The maximum purchase would give Goodnight and Sall 69 percent ownership in the company. The partners tried unsuccessfully to take the company private last fall after
the stock dropped to $6.125 a share. They offered to buy other shareholders out for $8 a share but dropped their offer after Midway's board apparently said it was too

Jim Verdonik, a corporate attorney with Kilpatrick Stockton in Raleigh, said the partners apparently want more stock because they like the company's prospects and
believe Midway's shares will increase in value.

"It doesn't sound like a control issue," said Verdonik.

He said the partners essentially control the company now with 47 percent stock ownership. Even with 69 percent ownership, Verdonik said the partners could still be sued
if they tried to take the company private in a deal other shareholders didn't like.

"It sounds like they think the company will be more valuable," Verdonik said. "It's not very sexy, but sometimes people do things because it makes economic sense."

Company shares closed Friday at $5, down 50 cents.

Pat Swift, research director for Campbell-Hill Aviation Group, an aviation consulting firm in Alexandria, Va., said Midway will be able to fend off competitors with the new
737s and having the billionaires' support strengthens the company's growth outlook even more.

"RDU has great traffic and as soon as they start filling up CRJs, someone will start trying to pick that up with larger airplanes," Swift said. "The 737s give them the ability to
defend the hub and local markets.

"I agree with the direction they're going in," Swift said, "and any time you have a company that's not just well-financed but has the community's support, half your day is
finished right there."

Hope all that helps.

Matt D
Posts: 8907
Joined: Fri Nov 19, 1999 6:00 am


Wed Sep 27, 2000 1:20 am

Now how can anyone argue with that?
As an enthusiast, I was sorry to see JI's Airbuses go. They really were sharp.
Matt D
Posts: 8907
Joined: Fri Nov 19, 1999 6:00 am


Wed Sep 27, 2000 1:20 am

Now how can anyone argue with that?
As an enthusiast, I was sorry to see JI's Airbuses go. They really were sharp.

RE: Why Did Midway Get Rid Of The A320?

Wed Sep 27, 2000 3:26 am

After all that, it seems Midway is in pretty good shape.
Posts: 1325
Joined: Wed Jun 21, 2000 7:56 am

RE: Why Did Midway Get Rid Of The A320?

Wed Sep 27, 2000 3:38 am

yeah they are doing good in Raleigh, I have flown with them several times and thought they were wonderful. Here is a recent report (9/11/00) on Midway incase you are interested...

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